Logo
Revolutionizing the Construction Industry: Cutting-Edge Rental Equipment Takes Center Stage
Jan, 31
2023

161 view

Revolutionizing the Construction Industry: Cutting-Edge Rental Equipment Takes Center Stage

 

pr-image.png
Renting construction equipment refers to the practise of renting construction equipment for a set period of time by signing contracts outlining the terms and conditions of use of the equipment. Renting heavy machinery construction equipment rather than purchasing it has proven to be advantageous to businesses of all sizes worldwide. As a result, the rental market for construction equipment has grown rapidly. It is prohibitively expensive because many industries require such equipment on a seasonal basis. Rental equipment is preferred by businesses due to its flexibility and ability to meet specific needs without the need for maintenance or insurance. Rental agreements now include provisions for on-site maintenance, repair, and replacement, which helps businesses reduce expenditures, maintenance expenses, and repair costs. Rental companies are capitalising on potential business opportunities by expanding their global reach through acquisitions or partnerships, as well as strategically incorporating technological upgrades into their fleet. Furthermore, transportation, operation, and maintenance requirements are greatly reduced. Both of these factors will drive future demand for construction equipment rental.

According to the research report, “Global Construction Equipment Rental Market Research, 2028” published by Actual Market Research, the market is projected to reach market size of USD 111.70 Billion by 2028, increasing from USD 82.43 Billion in 2022. Furthermore, the market is expected to grow at a CAGR of 5.30% between 2023 and 2028. Renting construction equipment not only saves money and investments, as well as maintenance and repair costs and operational costs, but it also eliminates the need for dock/parking space when machinery is not in use. Preventative maintenance, repair, and inspection costs can also be avoided because construction equipment rental companies perform these tasks on a regular basis in order to profit from the machinery in the long run. These businesses are currently focusing on providing onsite services and equipment support, which is improving the customer experience. Caterpillar Inc., for example, dispatches rapid response teams to assist customers in remote locations using mobile servicing vans.

The purchase of new construction equipment necessitates significant down payments as well as a significant investment from the company's operating expenses. Post-purchase overhead costs for construction equipment include loan interest, insurance, licencing, storage, and taxes. Furthermore, equipment owners are responsible for transporting their equipment between job sites. When a company chooses to rent equipment, the provider is responsible for delivering it to new work locations, allowing the company to avoid direct overhead costs. Furthermore, rental companies refresh their fleet of equipment and machinery on a regular basis to ensure that their customers have access to the most up-to-date equipment. Technological advancements in heavy machinery and the automotive industry have resulted in numerous novel features in the construction equipment rental market. Construction equipment manufacturers are focusing heavily on incorporating cutting-edge safety features such as 360-degree camera visual, lift assist, and supplementary work lights, as well as striving to provide systems that increase operational productivity while requiring minimal maintenance. However, these features come at a high cost, which is prohibitively expensive for many small contractors and builders. Because of these factors, professionals are more inclined to rent construction equipment.

The global construction equipment rental market is segmented into earthmoving machinery, material handling machinery, concrete & road construction machinery and others. The earthmoving machinery segment accounted for a major market share of over 50% in 2022. The increasing application of earthmoving excavators for mining, agriculture, and construction industries significantly contributes to segmental growth. The earthmoving equipments such as excavators, loaders, dozers, backhoes and motor graders have high load capacity and better engine performance. These features of earthmoving equipment make them suitable to be used in harsh working environments. Moreover, the growing construction of residential and large-scale commercial civil projects has increased the inclination of construction companies and contractors toward leasing earthmoving equipment. On the other hand, the concrete and road construction machinery segment is anticipated to register higher compound annual growth rate compared to other segments from 2023 to 2028. Road connectivity has the potential to define the future economy of the country, as an established infrastructure plays a crucial role in improving trade and commerce activities. In November 2021, the U.S. federal government passed the Bipartisan Infrastructure Deal (Infrastructure Investment and Jobs Act), which enables investment worth $110 billion to rebuild the roads, bridges, and others in five years. Safe streets and roads will be developed to reduce traffic fatalities and improve connectivity. Moreover, many developing countries in the Asia Pacific, such as China and India, focus on creating better road connectivity. For instance, China's "One Belt, One Road" initiative will connect China with European countries.

Furthermore, rapid industrialization and rising demand for construction equipment for industrial applications are expected to drive significant market growth in the material handling equipment segment. Dumpers/Dump Trucks/Tippers (Articulated, Rigid), Cranes (Tower Crane, Mobile Crane), Masted / Telescopic Handlers, and Forklifts are examples of Material Handling Construction Equipment. With a greater emphasis on maximising output, industries are seeking to reduce capital expenditures, a large portion of which is spent on purchasing material handling machinery. Major corporations can increase their profit margins by taking advantage of the same rental benefit. Over the medium term, the expanding construction industry, particularly in developing countries, will drive market growth due to numerous growth opportunities in the residential, non-residential, and infrastructure sectors. For example, the increased construction of multi-family houses (due to the growing trend of nuclear families), as well as increased investments in the construction of motorways, bridges, metros, smart cities, highways, and roads, as a result of rising population and urbanisation. Furthermore, the rising trend toward automation is expected to fuel market growth. Based on these factors, residential construction equipment rental is dominating the market. However, increased commercial use is driving market growth for non-residential applications. This segment is expected to grow at a CAGR of more than 6% in the coming years.

According to the report, the global market is divided into five major regions: North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. North America leads the market with a roughly 30% share in 2022. Industry participants are expected to concentrate on expanding their footprint in North America, with Canada expected to see increased demand for construction equipment rental services, prompting the government to increase investments in the region. However, the Asia-Pacific region is expected to gain traction in the global construction equipment rental market in the near future. Because of the increasing emphasis by governments on developing infrastructure for a sustainable economy, Asia-Pacific is one of the largest markets that has seen a boom in infrastructure and construction development. This region saw an increase in the number of Special Economic Zones (SEZs), hydroelectric projects, dams, highway constructions, metro constructions, airports, and other infrastructure projects to support high-level industrial activities, rising energy demand, and improved connectivity.

The North America market share is expected to exhibit substantial growth in the upcoming years. The strong presence of leading global manufacturers is contributing to the growth of the market. Additionally, construction companies across North America are being observed to be hesitant to invest in new equipment in these economic conditions. Hence, there are significant opportunities for the market to push through during the forecast period. These factors drive North America's growth potential and continue to grow the market share at the global level. The growth of the construction equipment companies in the region is due to the availability of project-specific technologically advanced machinery at a minimal cost. The specialized equipment reduces the operation time, eliminates the idling time, and optimizes the overall construction or mining activity, thus widely preferred. The prominent construction equipment rental companies based in the U.S., such as United Rentals, Ahern Rentals, Ashtead Group, and others, have increased demand for enhanced rental services and solutions. In addition, explicit efforts taken by these companies for technological developments, strategic collaborations, acquisitions, and effective aftermarket services are expected to have a positive impact on growth of the North America market going ahead.

On the other hand, the Europe market is projected to record considerable growth during the forecast period. This is mainly due to the increase in demand for new residential buildings. Additionally, Germany has a huge number of manufacturing plants, specifically in the automotive sector and the best performing machinery & equipment in the whole of Europe, which is further accelerating the market growth. According to the European Rental Association (ERA), sustainability of companies can be improved by services rather than buying them. In addition, the expansion of the fleet in these countries also underpins the growth of the European market. The market is anticipated to witness higher market growth owing to the recovering construction business with major and small-scale commercial and residential advancements. The soaring emphasis of construction firms on establishing long-term partnership projects with equipment rental, design and consulting firms, along with government initiatives for infrastructure improvement, is likely to boost regional profits. For instance, in April 2022, the EU launched the Climate-Neutral and Smart Cities Mission with the goal of providing 100 climate-neutral and smart cities by 2030.

Compared to other regions, South America is likely to grow at a modest rate due to niche opportunities for the development of manufacturing industries and the limited presence of global market players. Additional factor dictating the sluggish growth of the region is the underdeveloped distribution channel for the market. The governments' investment in developing public infrastructures such as roads, airports, ports, and the energy sector is expected to bring strong growth to the construction equipment market in South America. There is robust demand for construction equipment in the region. Contractors, mining, and construction companies are the major customers of the equipment in the market. Rental companies such as Carlyle Group, Grupo Orguel and BigRentz are having fair share in the market. Upsurge in global commodities price to positively drives South America mining sector. Enhanced demand for natural resources in recent years will positively impact demand for construction equipment used in the mining industry, such as excavators, loaders, and cranes. There is robust demand for construction equipment in the region. Contractors, mining, and construction companies are the major consumers of the South American construction equipment rental market.

Furthermore, rising government investments in infrastructure development and major infrastructure projects in the Middle East and Africa, such as those in Saudi Arabia, Kuwait, Oman, the United Arab Emirates, and Egypt, are anticipated to produce significant growth in the market. One of the major factors driving the growth of the market is the growing construction industry, especially in developing countries, owing to numerous growth opportunities in infrastructure, residential, and non-residential sectors. The rise in the construction of multi-family houses (with the growing trend of nuclear families), and increasing investments in the construction of roads, highways, smart cities, metros, bridges, and expressways due to the growing population and urbanization. The growing trend toward automation is expected to drive the growth of the market. Countries in the Middle East region such as Saudi Arabia and Qatar have an augmented demand for rental equipment such as loaders and excavators owing to surge in major projects such as FIFA World Cup 2022, Jazan Economic City, King Abdullah Economic City, Vision 2030, and Jeddah Metro.

Recent Developments
• December, 2022: Online crane rental service based in Dubai MyCrane has its own operation in the United States. The company stated that it chose to set up its own operations in the United States rather than appointing a franchisee, as it has done in other locations.
• On November 1, 2022, United Rentals, Inc., one of the leading global providers of equipment rentals, declared that Shell had received a fleet of all-electric vehicles for use at its Geismar (Louisiana) Chemical Manufacturing facility. As part of a pilot program for on-site electric vehicle (EV) mobility, Shell is employing rental equipment to support plant maintenance activities. To support the planned creation of low-carbon, environmentally friendly fleet policies for rental and Shell-owned vehicles, the program will test and assess the use of electric vehicles at the manufacturing site.
• In July 2022, United Rentals, Inc. declared that it would provide Turner Construction with environment-friendly options such as all-electric trucks and zero-emission power systems. Turner will use the rented machinery to lessen the impact of the construction site on the environment when building a hyper-scale data center in Kansas City, Missouri for Meta, formerly the Facebook firm. The equipment package comprises a 9.6-kilowatt Pro Power onboard generator system in addition to an all-electric, zero-emissions Ford F-150 lightning pickup truck with a range of up to 320 miles and a maximum towing capability of 10,000 pounds.
• October, 2022: The 50-tonne 653 E Electro Battery is Sennebogen's first battery-powered telescopic crawler crane. It was created in collaboration with dealer Van den Heuvel for the Dutch crane rental and construction markets, and it features coordinated battery technology and analog charging management.
• March, 2022: MyCrane has released a free selector tool to assist users in determining the best crane for their lift, as well as the crane's capacity and optimal configuration. The company has completed its digital crane rental tool and improved the customer's work process.
• August, 2022: Atlas Crane Service, LLC, a full-service crane rental company primarily serving the wind industry, announced that a fund managed by Ares Management's Infrastructure Opportunities strategy has purchased a controlling interest in the Company.
• July 19, 2022: joint rent, Inc. announced today that it will provide Turner Construction with sustainable solutions that include all-electric trucks and zero-emissions power systems. Turner will use rental equipment to build a hyper-scale data center in Kansas City, Missouri for Meta, formerly the Facebook Company, to reduce the environmental impact of the job site.
• March 11, 2022: Sunbelt Rentals announced the availability of the Sunbelt Rentals mobile app to help customers manage all aspects of their rental experience.
• 12 May 2022: Giken and Actio Corporation Enters into Rental Business Alliance

Covid-19 Impacts:
The global construction equipment rental market is expected to benefit from the covid-19 outbreak. Construction companies' reduced risk-taking capacity as a result of the pandemic is expected to contribute to market growth. The high cost of purchasing construction equipment, such as a large down payment, repair and maintenance expenses, and other additional operational expenses such as licencing, insurance, and tax, among others, is influencing the adoption of equipment on a rental basis, particularly among large construction sites. This increase in rental equipment adoption across the construction industry is also influencing equipment manufacturers to broaden their portfolio of equipment renting services in order to cater to a larger consumer base. For instance, MCE (Mahindra Construction Equipment), not only sells its product offerings but also offers them on rental basis to construction companies.