The equipment rental market has witnessed outstanding growth in the past years. In 2014, a survey showed that even if leasing was still a leading strategy for construction managers, heavy equipment rentals have increased 75% in 2013 to 2014 – with specialized equipment types showing even higher spikes in rental frequency.
While some equipment proved to be more popular than the other, the past trends showed an ascending direction towards renting instead of buying.
How are things this year, one may wonder, especially since the world builds bigger, better, faster, and more? To understand the trends and predictions for equipment renting industry better, we should look at things from multiple perspectives: rented equipment needs, big projects, national and international economic tendencies, and more.
What we build defines the market and sets the trends. According to recent data, the construction equipment renting market in the United States will see growth by 4% from 2018 to 2024, while in the U.K. it will see an increase of 2.8% by 2019.
What are the Factors Contributing to the Equipment Rental Market Growth?
We live in a world that moves, changes, and evolves continuously. If we take into account the global tendency of building megastructures and implementing never-seen-before-projects, it is clear that the market growth comes with a series of explanations.
1. Governmental Projects set the Tone
When it comes to renting heavy equipment, some of the most significant infrastructure and administrative projects explain the ascending trend: we have the Comcast Technology Centre project, the Stockholm Bypass Project, the London Crossrail 2 Project – all great opportunities for the equipment rental industry to boom.
In other words, governments’ tendency to invest in infrastructure all over the world is a clear sign that the equipment rental market’s growth will be a progressively steady one since it will take years for such projects to arrive at their finish line.
Moreover, it is more comfortable, safer, and more affordable for cities or governments to work with rental companies than owing their fleet of construction equipment. Besides not worrying about the costs of owning, storing, and maintaining such fleets, cities and governments do not have to deal with technical charges either.
2. Emerging Economies Make the Equipment Rental Business Rise
Another trend we have to watch out for is the shift in consumption patterns and consumers’ behavior, leading to rising innovative projects in some parts of the world. Such example is China – a dominant economic power – that generates unprecedented require of heavy equipment renting services.
Moreover, the escalating infrastructure reconstruction activities in the Asia Pacific region as well as in emerging economies in Latin America and Eastern Europe lead to an increase in demand for large construction machinery.
In case you consider the equipment rental business bound to governmental projects, you have to find the other factors that lead to growth:
- Fast urbanization of areas in emerging countries and economies;
- Rise in demand for roads, railroads, bridges, and infrastructure in such freshly urbanized areas;
- The increase in residential, healthcare, touristic, and commercial projects in such areas;
- The rise in demand for industrial projects (new construction or refurbishing): gas pipelines, sewers, electricity, etc.
As consumers become more and more demanding, the bigger the projects get – if we do not build bigger homes, we indeed make more; you can also consider large shopping centers and malls (which tend to become larger and larger by the year), entertainment venues, and more.
From a financial, insurance, maintenance, and safety point of views, it makes more sense for institutions and companies to rent construction equipment than buying it.
3. Competition Makes things Move Forward
Back in 2014, you had a handful of big players in the equipment rental field sharing the market and trying to stay ahead of each other. Today, together with new technologies and local opportunities, we have a myriad of rental companies operating at a regional, national, or international level.
If you look at the database we mentioned above you will realize that even companies not traditionally involved in renting heavy construction machinery play now this game successfully (Home Depot, Hertz, etc.).
Since the market and its demand becomes larger, renting companies now race against each other and against time to come up with the better offer. Some rely on technologies nobody was dreaming of four years ago (like the Internet of Things or telematics), while others sell based on their reputation, good name, and experience in the field (Ashtead Group, Caterpillar, Ahern, etc.).
Competition, besides making things move faster, also makes things safer. All big companies invest millions in certified workers’ training, insurance policies, workers compensation, seamless machinery maintenance, eco-friendly adaptations, and more.
While the equipment rental market has its fair share of threats, it also has opportunities never seen before. According to the ARA Rental Market Monitor forecast, the U.S. renting market shows a positive trend, just like Canada, the United Kingdom, and the Asia Pacific do. Moreover, it seems that the Tax Cuts and Jobs Act taking effect in 2018 will generate a rippling positive impact for U.S. rental companies and their international clients.
Len McCluskey is a technical writer and genuine handyman. Join him at EquipmentRental.org, where he reviews various top tool and equipment rental companies and their services. The main goal of the website is to help construction workers or DIYers to choose the best tools for their needs.