Market Levels Rising in the Process Level Measurement & Inventory Tank Gauging Segments

May 2012

 

By J Timothy Shea, Senior Analyst at VDC Research Group

 

VDC Research Group partnered with Automation.com to help generate recently published comprehensive investigations into the markets for process level measurement and inventory tank gauging solutions. In 2011, the combined market segments of both electronic and mechanical technologies generated over $2.5 billion in revenues worldwide.

 

Due to expected increasing demand for level measurement and inventory tank gauging technologies as tools to help companies to continue to improve operational efficiencies, increase productivity, gain greater control over inventories and enhanced accuracy, VDC is forecasting a 5.2% CAGR through 2016 which will generate total shipments, comprised of thirty-four different technology segments, of almost $3.3 billion.

 

 

Electronic process level measurement and inventory tank gauging solutions will comprise over 88% of the $3.3 billion market opportunity, of that 88% share electronic process level devices will comprise 83%. Feedback VDC received indicates users are increasing their reliance on electronic process level and tank gauging solutions to provide access to real-time information, typically connected to the Ethernet via a field bus or Ethernet application-layer network protocol, thereby enabling greater automation, flexibility and agility in operations and/or greater accuracy for custody transfer, inventory storage/control, etc.

 

Within the process level measurement market, shipments of continuous level measurement devices will remain over 3.3 times larger on a dollar volume basis than point measurement devices despite the faster growth in point devices due to an increasing need for safety systems and overfill protection. Continuous level measurement is required in a far greater number of applications and the devices used to serve those applications are far more expensive than point level devices.

 

For those devices providing network connectivity users are relying on a number of different wireline network interfaces including HART, Modbus, Profibus, Foundation Fieldbus and others as they are in greater need of real-time data for greater flexibility, operational agility and actionable information in decision-making. A growing number of users are increasing their reliance on wireless networks such as Wireless HART as they increasingly realize the benefits of wireless connectivity including reduction in cable costs and maintenance, increase in mobility and flexibility, ability to operate in areas previously not accessible via cables, greater scalability, ease of installation and more.

Among the large electronic process level measurement technology market hydrostatic pressure transmitters will still comprise the largest share of shipments, over 33%, in 2016, despite robust growth seen in microwave/radar (contact and non-contact) devices which are continuing to chip away at the dominance hydrostatic devices have long enjoyed. The persistent dominance of hydrostatic level sensing can be attributed to a number of considerations, depending on the application. Attributes of hydrostatic level sensing may include low product and/or maintenance cost, ease of installation, ruggedness, proven reliability, broad media compatibility, as well as user familiarity.

 

Regardless of which attributes matter the most to whomever, the only possibility of achieving any significant growth in any other level sensing technology is to optimize the mix of price, performance and operation to offer a credible alternative to the venerable hydrostatic level sensor in a broad array of mainstream applications. The prevailing strategy of targeting only those applications where hydrostatic sensors don’t work is both limiting and shortsighted. Obviously, a drop-in replacement for a side-mounted hydrostatic level transmitter with a microwave/radar level gauge is not feasible, but is it not possible to achieve some degree of equivalency for other key characteristics? Hydrostatic level sensor emulation should be a priority.

 

Microwave/radar (non-contact) marine and non-marine inventory tank gauging systems comprise the bulk of the large electronic inventory tank gauging market, comprising almost 59% of overall total in 2011. Demand for these radar devices which are perceived as offering greater performance and higher accuracy devices is expected to drive their share to 61% of overall electronic tank gauging market by 2016. Demand for the radar units designed for use in non-marine tank gauging applications will be more robust as these units typically have much lower price points and can serve a broader base of applications.

 

Among the smaller mechanical process level markets, the predominant technologies used are displacer transmitters and single point float switches; combined these devices are expected to comprise almost 81% of the slower moving mechanical market in 2016. Attributes of displacer sensing include simple control capability and easy set point change and is well established in gas & petro market. Disadvantages include suitability only for non-freezing liquids, difficulty of calibration, and susceptibility to changes in specific gravity. Single point float switches will remain the 2^nd most demanded mechanical solution due to its simplicity, lower price points and ease of use; multi-point float growing but expected to remain a fraction of market despite greater performance and product improvements.

 

Among the smallest mechanical inventory tank gauging (ITG) markets, the dominant technology that users are expected to continue to rely on is single point float ITG devices. Rising oil prices are driving increased investment in oil & gas exploration, production and therefore more storage. Marine, mainly transporting gas and/or petroleum, and gas & petroleum segments combined comprised over 74% of overall shipments. The need for greater accuracy has never been greater, especially for custody transfer applications. Single point float ITG devices will remain the dominant solution due to adequate accuracy (assuming repeatability), lower costs and ease of use as well as being established.

 

There are many end user markets consuming one or more of the thirty-four process level measurement and/or inventory tank gauging solutions under study, but the largest consuming industries ranked in descending order based on 2011 dollar volume shipments are as follows:

 

 

VDC determined that certain technologies were better suited to serve certain applications based on factors such as environmental operating conditions (harsh or hazardous environments, etc.), price/performance, accuracy requirements, network connectivity requirements and more. For example, a supplier of a non-contact microwave/radar device will be less likely to target this technology at water/waste water applications as these are more likely to be served by hydrostatic and/or sonic/ultrasonic solutions. The majority of marine application usage was likely in shipping gas and petroleum; combined these two segments comprised the bulk of inventory tank gauging solution shipments.

 

If suppliers of process level measurement and inventory tank gauging technologies want to continue to remain successful in serving the needs of their customers than they may be interested in some of the top level feedback obtained from over 340 respondents indicating usage of one or more of the technologies under study. The following graphic represents a breakdown of respondent feedback on key factors driving their decision to increase their investments in future process level measurement and/or inventory tank gauging solutions.

 

 

Suppliers are well advised to understand that the process level measurement device and/or inventory tank gauging system being sold is itself only but one component among the many factors that most end user organizations consider when making a decision on which solution in which to invest. Given that the bulk of the entire market is comprised of electronic devices, suppliers should focus their efforts on developing either best in class in-house application and technical support capabilities or partner with 3^rd parties which possess the requisite technical expertise, applications knowledge and strong customer service programs.

 

 

Not surprisingly, accuracy topped the list of most important product features that respondents considered when making an investment in a process level measurement and/or an inventory tank gauging solution. Suppliers are well advised to consider the top 15 product features ranked in descending order based on respondents surveyed.

 

 

Respondents indicated that their desire/need for suppliers who can provide not only best in class product features and performance but also critical non-product related issues such as product availability/timely delivery, local/on-site technical and product support, availability of spares, free product demos, broad product selection and long-term product support. Other less tangible factors which are important to users include a supplier’s reputation and brand name recognition.

 

The competitive landscape in the markets for process level measurement and inventory tank gauging is in many ways almost as fragmented as the number of different technologies that comprise the ecosystems themselves. VDC found that the market for these solutions was being served by companies large and small, by companies with relatively broad technology and product portfolios to companies with focused product portfolios comprised of just one technology and/or product. In most cases however, VDC determined that the companies offering the broader (or broadest) technology offerings supported by best-in class service and support, via in-house or via 3^rd party partners, enjoyed the greatest success in terms of market shares gains and/or overall sales volumes.

 

Below are the leading suppliers of the respective technology segments ranked in descending order based on 2011 worldwide dollar volume shipments.

 

 

In the final analysis, VDC determined that the greatest opportunity for vendors lies with supplying a relatively broad base of electronic process level measurement and/or inventory tank gauging solutions. For suppliers lacking the size, financial backing, and necessary resources to provide a broader based portfolio, VDC recommends that suppliers focus their efforts on serving niche market application segments with the technologies which are best suited to serve those application requirements.

 

Companies will always need to measure their process operations and/or manage their inventory for custodial transfer or for any number of different reasons, so the market outlook is pretty solid overall and is even more attractive for electronic solutions which enable network connectivity and access to real-time information. Companies are increasingly seeking out suppliers who are genuinely interested in developing a partnership, one that is focused on helping the customer to better compete in their own businesses by help their own customers improve their lives and well being.

 

 

J Timothy Shea, Senior Analyst, can be reached at VDC Research Group, Natick, MA; 508-653-9000, x-132, [email protected].

 

VDC Research Group (VDC) is a technology market research and strategy consulting firm that advises clients in a number of technology markets. Using rigorous primary research and analysis techniques, the firm helps its clients identify, plan for and capitalize on current and emerging market opportunities. Our products and services consist of research reports, annual research programs and custom research and consulting services. Founded in 1971, the firm is located in the Boston area.