The industry is highly competitive and is characterized by thousands of operations serving local or regional markets. Production costs vary widely depending on geographic location, the nature of the deposit, and the number and type of products produced. Constant dollar unit values have been quite steady during the past 20 years. Increased productivity achieved through increased use of automation and more efficient equipment was mainly responsible for maintaining the prices at this level. Constant dollar prices are expected to rise in the future because of decreased deposit quality and more stringent environmental and land use regulations.
Transportation is a major factor in the delivered price of construction sand and gravel.
The cost of moving construction sand and gravel from the plant to the market often exceeds the sales price of the product at the plant. Because of the high cost of transportation, construction sand and gravel continues to be marketed locally. Economies of scale, which might be realized if fewer, larger operations served larger marketing areas, would probably not offset the increased transportation costs. Truck haulage is the main form of transportation used in the construction sand and gravel industry. The industry also faces increasing competition from crushed stone that can substitute for sand and gravel in most of its applications.