=The construction equipment rental market has been booming in recent years, as leasing has replaced purchasing as standard practice in housing, energy, transport, and other sectors. The trend can be observed in companies of all sizes.
Causes and Factors in Growth
Driving the increase in equipment renting has been the need to reduce maintenance costs and technical problems in these capital-intensive and project-based sectors. The practice also lowers transportation, operation, and servicing costs.
The development of low-cost, eco-friendly equipment appears poised to displace conventional equipment in the near future. Renting displaces the costs of taxation, maintenance, upgrades, insurance, inflation and depreciation while allowing companies to focus attention, labor, and capital on their core competencies.
Another benefit of the rental market is the rental firms upgrade their inventory regularly, allowing renters access to the latest equipment in the freshest condition. This, in turn, allows them to meet EPA regulations with greater ease. In fact, strict regulations, ownership costs, and financial limitations are all fueling demand for rentals.
Rental companies, ever fleet of foot, are using their mobility as a competitive advantage, deploying to locations where demand from construction and infrastructure firms is greatest. On the other hand, fuel price instability, as well as the cost and complexity involved in loading equipment could constrain growth.
The construction rental equipment market is heavily segmented by product type. There are three kinds of equipment widely in use. Earthmoving machinery includes things like dump trucks, excavator, and site dumpers.
Material handling equipment includes everything from pallet trucks to containers, bins, cranes, silos and shelves. Truck-mounted cranes were the most demanded item in this sector due to their versatility and mobility, while demand for traditional crawler cranes, which are more difficult to transport, has declined. And concrete and road construction machines encompass pavers, rollers, trenchers, and more.
While earthmoving equipment has been the dominant market segment, material handling equipment shows the highest growth rates. Earth moving equipment is in high demand in myriad sectors, including construction, mining, and agriculture.
The Asia / Pacific region is the locus of global growth in the rental equipment market. Rapid economic development, urbanization, population growth and burgeoning IT sectors all make China and India, in particular, premier markets for rental equipment.
Massive road-building projects are underway in both of these nations. China’s titanic “One Belt, One Road” initiative aims to connect China to European countries. And India’s “Bharatmala” plan seeks to connect all of its cities with a single road. The increased transport these nations have experienced and plan to experience are vital to their economic development.
In North America, solid demand is undergirded by the strength of the residential housing market. Construction equipment rental is in heavy demand throughout Western Europe. In the Middle East, major oil producers have been making huge investments in green building, which relies heavily on rented equipment. Construction pumps are in huge demand in the Middle East.
Renting is rapidly replacing ownership as the norm for most industries that rely on construction equipment. Demand is driven by a need to reduce the costs and technical difficulties associated with ownership and by the rapid development of India and China. The near future for equipment rental looks bright.