Renting can be defined as procuring equipment for a temporary purpose in order to help those who are not willing to buy that equipment. Several construction projects are executed by hiring construction equipment from equipment rental companies.
Key Drivers of Rental Construction Equipment Market
- Using rental equipment in construction projects is likely to help construction companies to focus on the construction project rather than on equipment. Furthermore, it also reduces the financial burden, since purchasing construction equipment often requires significant down payments and diverting large portions of capital from operating expenses. Additional expenses include insurance, taxes, licensing, interest on loans, and storage costs. Therefore, these factors are driving the rental construction industry.
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Challenges in Rental Construction Equipment Market
- In mid-March, as countries across the globe initiated stay-at-home mandates, numerous companies halted ongoing or soon-to-start construction projects to mitigate the spread of coronavirus among workers. As of early June, most nations restarted construction in progress that was stalled prior to the pandemic, or broken ground on new projects with few restrictions. Some countries still have tighter restrictions in place. For projects that had broken ground and were actively being built, there have been some delays; however, these projects have mostly commenced unhindered since mid-June unless they experienced county-level restrictions or issues related to building material delivery. New projects are still being planned, bid out, and started. Reopening the economy is contributing to the recovery of the construction industry.
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Opportunities in Rental Construction Equipment Market
- Expansion of the rental market is in line with the rise of the sharing economy, a shift in mindset from ownership to access, and increasing environmental awareness. Contractors are likely to be less inclined to purchase new construction equipment in the near future and would be more likely to access it via the sharing business model, of which rental is an example. In light of the COVID-19 pandemic, rental would become even more valuable to the construction industry, as it recovers from economic downturn, by offering customers peace of mind with minimal financial risk, flexible contract conditions, and fixed costs. Customers can pay as they earn, returning machines when a project ends, or taking payment holidays when required. Therefore, the shared economy trend and COVID crises is estimated to propel more number of construction operators toward rental construction equipment and subsequently, provide significant opportunity for the rental equipment market.
Rental construction equipment market in Asia Pacific to expand at a notable growth rate
- Asia Pacific is a major market for the rental construction industry, owing to a rise in urbanization, industrialization, and infrastructure spending by countries in the region in order to boost the rental construction sector in the region. The economy of China has recovered relatively well from the COVID crisis as compared to other nations. The government is once again looking at infrastructure investment as a pillar for economic growth; hence the government is shifting focus on urbanization and major transportation and water conservancy projects. Nearly all of China’s 31 provinces, municipalities, and autonomous regions have announced key infrastructure investment plans for the next 5-7 years, covering 24,515 projects at RMB 43 trillion, of which around 25% would be spent on transportation projects. Moreover, the central government has so far shown its support for regional and local governments in this challenge. It plans to transfer RMB 2 trillion in funding directly to local governments to support economic recovery, and has increased its quota for special purpose bonds used to fund infrastructure investment by RMB1.6 trillion to RMB 3.75 trillion. Likewise, the infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have sustainable development of the country. The government has suggested an investment US$ 750 billion for railways infrastructure from 2018-30.
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Key Players Operating in Rental Construction Equipment Market
- Loxam Group
- United Rentals, Inc.
- Mtandt Rentals Limited
- Cramo PLC
- Nesco Rental
- The Hertz Corporation s
- Boels Rentals
- Unirent LLC
- Caterpillar Inc
- Ahern Rentals, Inc
- Aktio Corporation
