Chemical Distribution:

Distribution of chemical products, warehousing, toll-blending, formulation, repackaging, private labeling, logistics, trading, import and export services, etc.

The complex product portfolio of chemical industry and its highly fragmented landscape needs the chemical distribution sector to manage the ever increasing complexity for producers and customers. More and more, suppliers are rationalizing their distributor base and developing more sophisticated sales channel management models, increasingly focusing their direct sales on large strategic clients while outsourcing distribution to smaller clients. The chemical distribution sector is the middleman who matches supply and demand.

The role of a chemical distributor involves one or more elements of: sourcing from multiple producers to ensure a broad and complimentary product offering, taking physical ownership of products, warehousing, mixing, blending, formulation, repackaging according to customers' needs, physically transporting goods to customers, recycling, and other related value added services. There are chemical distributors that provide turn-key services, and there are those that may focus on just one area of the value chain, such as logistics-only companies that typically do not take ownership of products, and trading companies that provide only buying and selling services.

Top players in the chemical distribution space include Brenntag, Univar, Nexeo Solutions, IMCD, ICC Chemical, Helm, Sinochem International, Omya, Biesterfeld, and Azelis. The chemical distribution landscape is highly fragmented, with the top three players in North America holding 30 to 40 percent of the market share. There are more than 10,000 distributors, big and small, servicing the end-users for their chemical needs worldwide, with just ~10% of the global chemical supply being handled by third party distributors. The market size is estimated to be over $200 billion and is driven primarily by the underlying growth of chemical consumption. The barriers to entry coupled with the high degree of fragmentation imply a tremendous growth opportunity in this segment over the coming years.

Back to Sectors