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Resource-proximate siting - industrial gases

Business Model & Unit Economics · Value-chain position

What it is

The concentration of customers around a production or filling location. Because gases are expensive to transport relative to their value, delivery cost per unit falls sharply as customers cluster within a radius

Density, not total capacity, determines profitability in the merchant and packaged business

Impact on industries

  • A dense local network is a genuine barrier to entry - a new competitor must serve scattered customers at higher delivery cost until it builds density
  • Incremental customers inside an existing radius are highly profitable, since the delivery route already exists
  • Expansion into a new region requires building density from zero, so growth is geographically stepwise rather than continuous
  • It is the same hub-and-spoke logic seen in diagnostics and distribution - processing scale plus local reach

Industries affected