Purchasing new construction equipment often requires high down payments and investing a large portion of capital from the operating expenses of the company.
There are numerous other overhead costs.
- Interest on loans
If the company procures the equipment on a rental basis, the responsibility of providing the equipment to new work sites is carried by the provider and the company using it does not bear those direct overhead costs.
Renting construction equipment not only saves the cost of buying new equipment but reduces expenses such as labor cost, maintenance cost, and operational costs.
The cost of timely maintenance and repair is avoided. Construction equipment rental companies must perform all these tasks regularly to gain long-term profit from the machinery. Many rental companies are now offering onsite services and support for equipment, which further enhances customer experience.
Furthermore, the rental companies often upgrade their fleet of equipment and machinery on a regular basis, providing its customers with upgraded and the most advanced equipment.
The global construction equipment rental market size was valued at USD 92.9 billion in 2019 and is projected to expand at a CAGR of 4.9% over the next few years.
Technological advancements in heavy machinery sectors have brought many new features to the market for construction equipment rental.
- Advanced safety features such as lift assist,
- 360-degree cameras
- Additional work lights
- Systems to improve operational efficiency and decrease maintenance.
These features come at a high price, which would not be affordable to many small builders and contractors, but are becoming standard on rental construction machinery.
Types of Equipment
The construction equipment rental market can be segmented into a few categories
- Earthmoving machinery
- Material handling machinery
- Concrete and road construction machinery
The earthmoving machinery segment dominated the market for construction equipment rental in 2019. However, the concrete and road construction machinery segment is anticipated to exhibit the highest CAGR of 6.1% from 2020 to 2027.
Earthmoving machinery such as excavators have enormous demand because of their wide application scope in construction and other sectors. Other equipment in this category are skid-steer loaders, backhoe loaders, crawler excavators, and mini excavators.
The material handling machinery segment comprises crawler cranes, trailer-mounted cranes, and truck-mounted cranes. Increasing construction of skyscrapers and mega infrastructure projects are expected to boost demand for these types of machinery.
Demand for concrete and road construction machinery on a rental basis is anticipated to grow steadily. Roads are considered as an indicator of a country’s overall development as better road connectivity aids in improved trade and economic growth.
The pandemic has caused builders to look hard at their business models and, as a result, many contractors are looking to make decisions and investments to reduce construction time and costs. Rental equipment is an attractive way to address both concerns and it also can be looked at as a way to offset higher material costs as well.
Technology Advancements in Equipment
It is predicted that by 2030, construction equipment will come with guaranteed levels of uptime, and site managers will be able to remotely monitor the equipment with the help of digital notifications about maintenance and repair needs. Managers will have access to automatic project updates that they can use to quickly change the day’s work plans. Other oncoming digital tools will track each machine’s fuel consumption and CO2 emissions, must-haves in the more tightly regulated world that’s coming fast.
Three accelerating and interconnected trends—the evolution from products to solutions, the rapid adoption of digital technology, and the sustainability imperative—will fundamentally transform the $2.5 trillion industrial-machinery sector over the next decade. These trends will help shape production for those most willing to rethink their current business models and may leave behind any companies that remain complacent.
More competition is good for the customer
The biggest machinery makers used to have an insurmountable advantage owing to the scale of their manufacturing bases, the quality of their engineers, and the reach of their sales channels. The gap is narrowing; OEMs once considered to be second tier now offer high-quality products of their own. New distribution and sales partnerships, both physical and digital, have increased competitiveness. On top of that, digital-solution providers and aftermarket services, sometimes in tandem with rental businesses, are now players that compete for customers. Some of them have more flexible operating models and more customer-centric offerings.
Rental Companies and Software
The advent of digital technology and software means your rental company will be able to adapt and react at a moment’s notice. Their ability to be agile and react quickly to construction needs is making construction companies more open to giving up owning their own equipment. Having real-time visibility and the ability to track all their equipment is the key to rental agencies being profitable with the construction business.
Proper documentation with equipment rental software can help identify damage and having a waiver clause in place and faster methods to process insurance claims give the rental fleet greater job readiness. Furthermore, real-time utilization reports even aids in reducing disputes and optimizing billing.
With rental equipment software, reports and analytics will keep all parties informed about preferences and trends and build a solid partnership between rental company and builder.
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