Market Overview
Construction equipment rental is leasing heavy machinery for concrete mixing, material handling, earthmoving, and other related tasks. Leasing heavy machinery construction equipment rather than purchasing it has proven beneficial to companies of all sizes around the world. As a result, the construction equipment rental market has expanded rapidly. Such equipment is expensive and unaffordable since many industries only need it occasionally. Businesses prefer rental equipment because of its adaptability and capacity to meet specific requirements without requiring maintenance or insurance. One of the key factors driving the market growth is the world’s thriving construction industry and increasing investment in infrastructure development. Another significant growth-inducing factor is the industry’s emerging trend of automation. Rental companies now offer technologically advanced machinery, including artificial intelligence (AI), and professional operators and drivers. This helps the lessee/organization reduce overall costs, improving operational efficiency. The advancement of modern equipment with sustainable and eco-friendly features, rapid urbanization, the growing trend toward smart cities, and other factors are anticipated to fuel market development. However, fluctuations in fuel prices and the cost of picking up and delivering machinery, especially if the contractor works in remote areas, are expected to impede global market growth in the forecast period.
Key Trends
- Credence Research Inc. predicts a significant shift in global trends toward the rental of construction equipment as one important trend. The benefits of renting construction equipment are enhanced in today’s economy and given the cyclical nature of the construction industry. Many industries, construction companies, and contractors are looking into rental options. Equipment ownership, the preliminary asset cost, the time it takes to pay off machinery financing, and repair and maintenance costs are all associated with purchasing new machinery. Construction firms are wary of such costs, and the cyclical nature of the construction industry and economic fluctuations can make it difficult for organizations to fully utilize and obtain the most value from the equipment they have purchased, especially when that machinery is idle during slow business conditions.
Economic Impact Analysis
The construction equipment rental market report, 2022-2028, examines the economic downturn’s predicted effects on major supply chain disruption and low rental penetration in emerging nations. The construction sector is particularly susceptible to the economic downturn and recession consequences. In an economic downturn, the construction sector suffers as the final output is reduced due to a lack of consumer demand. The resulting drop-in construction activity impacts the construction equipment rental market, posing a challenge to the market’s growth rate.
- Recession
Recession and economic downturns have a particularly negative effect on the construction industry. An economy experiences several business cycles over its lifetime, during which it experiences periods of high or low economic activity, and these cycles impact the rental market for construction equipment. Economic shifts can be broken down into cyclical growth, contraction, trough, and recovery stages. Construction and the rental of construction equipment both grow rapidly in economies on an expansionary trajectory, with the profitability of both industries increasing exponentially. High consumer demand and convenient access to public-private infrastructure investments are responsible for this growth. Alternatively, a recession-plagued economy harms the construction industry by reducing final output due to a lack of consumer demand. The consequent decline in construction activities impacts construction equipment rental demand.
- Ukraine-Russia War Impact
Construction projects are unquestionably heavily dependent on intricate international supply chains. Global construction projects have been hampered by the conflict between Russia and Ukraine and the sanctions imposed on Russia. The conflict in Ukraine has further hampered supply chains, which were already strained due to a global pandemic. This has increased costs, led to a shortage of materials, and extended project timelines, often significantly. Further ripples in the supply chain could result from disruptions to international trade and transportation routes. These impact the construction industry and, thus, the construction equipment rental market directly and indirectly. Construction companies now face significantly higher operating costs as a result of the conflict in Ukraine, which has resulted in record fuel costs and rising material costs.
- China COVID Outburst December 2022
The current COVID-19 situation in China will have minimal impact on the construction equipment rental market in 2023. The COVID-19 pandemic influenced the equipment rental industry’s demand. However, the market experienced significant growth in 2021 due to many rental companies capitalizing on the uncertainty brought on by the pandemic. Every time a wave of COVID-19 hit, the pace of construction around the world fluctuated, forcing small and medium-sized construction firms to rent rather than buy machinery. Rising commodity prices, a lack of qualified workers, and high-interest rates for construction companies are all predicted to make the situation in the industry even more uncertain. Therefore, it is anticipated that these factors will increase the market’s acceptance of construction equipment rentals.
Regional Analysis
Asia Pacific currently holds the largest global construction equipment rental market share and is anticipated to grow the fastest during the forecasted period. The region is one of the largest markets that has seen a surge in infrastructure construction and development as governments emphasize building infrastructure to support a healthy economy. Furthermore, the rental market for construction equipment in North America accounted for the second-largest revenue share in 2022 due to the substantial presence of key market players in the region, such as Caterpillar Inc, United Rentals, and others. Additionally, it’s anticipated that these companies’ overt efforts to foster technological innovation, strategic alliances, acquisitions, and effective aftermarket services will positively impact the growth of the North American market.
STAR Analysis
- Situation
Our client, a leading aerial lift and heat solution rental provider based in Canada, intended to expand their business in 2022 by providing rental machinery at a lower cost. They wanted to look into their competitors’ pricing strategies to determine their rental equipment’s costs.
- Task
The client requested a construction equipment rental market report to assist them in evaluating and developing a new pricing strategy for their product services portfolio. The report needed to include product prices determined by competition rather than overall service costs and overheads.
- Action
The client contacted Credence Research Inc., which provided business insights on key rivals, their main advantages & disadvantages, and how they fare in the global market for renting construction equipment based on a competitive benchmarking matrix. Credence Research Inc. provided the client with comprehensive information on detailed company profiles, including company overview, product benchmarking & pricing, and SWOT analysis for the key market players.
- Result
The client developed their ideal pricing strategy with the help of Credence Research Inc.’s thorough analysis of the construction equipment rental market report. Additionally, the client was helped in choosing the appropriate service prices and comprehensive solutions across various applications by a detailed review of current and future trends, competitor pricing, and supplier-buyer networks, enabling the client to increase its geographic presence.
