← Business Models: Industry Specific (Industrials & Materials) (all topics)
Resource-proximate siting - industrial gases
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