Why is construction equipment renting gaining momentum in the infrastructure sector?

Why is construction equipment renting gaining momentum in the infrastructure sector?

by Pranali Mehta

Infrastructure development is becoming increasingly commonplace, especially in emerging economies.

With prolific developments on the horizon in the construction domain, the need for sophisticated and efficient construction equipment is likely to witness a significant surge as well. In this scenario, one of the most crucial questions to arise for the construction industry is whether to purchase or rent construction equipment.

A general rule of thumb in the construction sector states that if a particular piece of machinery remains unused for more than 60-70% of the duration, construction equipment rentals are a more lucrative option. The rising costs of construction machinery, lack of capital, technological innovations, uncertainty in terms of infrastructure & construction growth, limited space availability, and costly breakdowns are among the many factors urging the modern contractors to show more inclination towards CE rentals, rather than purchase.

As such, the construction equipment rental market is witnessing a significant rise in popularity in recent years, owing to several factors. Rented equipment delivers more cost savings and in turn, help run a more economically stable business. Estimates claim that the global construction equipment rental industry size is likely to exceed an appreciable USD 170 billion by 2026.

New technologies are making rented construction equipment a more viable option 

As construction equipment becomes increasingly technologically-charged, it is also becoming significantly more expensive, given the growing complexities in development and operation. Taking this into account, many industry players are veering towards construction equipment rentals, which gives them a more cost-effective option to leverage the latest CE technologies, without having to make large payments upfront.

Technology is set to have a transformative effect on the construction equipment rental industry in the upcoming years, bringing forth unique opportunities for contractors and rental companies to boost their business operations.

For instance, in December 2019, Alert Management Systems announced the integration of its equipment rental software with SmartEquip, with an aim to enhance the efficiency of parts ordering for rental fleets. The partnership was geared towards giving Alert customers a considerable reduction in equipment-related operating costs, by streamlining work order and purchase order process for rented construction equipment fleets.

Technology also plays a key role in the safety aspect of CE rentals. The more knowledge operators having regarding their machines, the safer it is for them to operate and work on the jobs.

For example, Serious Labs collaborated with Skyjack and Nationwide Platforms to introduce a new virtual aerial operator training solution, dubbed the MEWP VR Simulator, for the rental sector. The solution was designed to allow trainers to put their trainees in high-risk scenarios safely, so as to help them develop safety skills without risking physical harm or injury.

Expansions, partnerships, and other strategic activities will help accommodate growing demand for CE rentals

In the present scenario, aggressive growth strategies are being employed by key construction equipment rental industry players to solidify their position in an increasingly competitive business landscape. These strategies range from fleet expansions to partnerships to M&As, among others, which are helping these industry participants to simultaneously accommodate rising demands for rented construction equipment, whilst maintaining a competitive share in the industry.

To illustrate, in December 2020, New York-based ABLE Equipment Rental Inc., a leading CE rental, parts, sales, and services supplier announced its purchase of the service operations and equipment assets of New Jersey-based GAR Equipment Inc. The deal was inked with the objective of allowing ABLE to expand its fleet size, in order to cater to the growing demand for construction equipment in the areas it serves, as well as to increase its customer base.

Likewise, Saudi Arabia-based heavy equipment and crane rental firm Tamimi Rentals (Fahad S Al Tamimi & Partners Co) in November 2020, added 50 Grove GRT8100 rough-terrain cranes to its existing rental fleet, in order to support its expansion into the oil & gas domain.

Emerging economies are a major hub for equipment rental companies. In India, for instance, as the industrial domain begins to slowly recover from the onslaught of the deadly COVID-19 pandemic, initiatives like NIP (National Infrastructure Pipeline) are driving considerable infrastructural growth.

According to industry experts, between April to October 2020, road project awards grew more than 90% in the country, almost twenty-three new expressways having been announced, with completion dates targeted to be between March 2023-March 2025. This indicates a significant potential for the use of construction tools and equipment across the region.

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writRead more...