Infrastructure Developments Driving Market Growth to New Heights
Global Newswire, Off-Highway Research and a few other market based reports have revealed that as of 2023 the global excavator rental market’s value is estimated at AUD$ 10 billion and this value is expected to continually expand at a rate of CAGR 4.7% over the next decade. Companies that provide construction equipment such as excavators for hire are finally starting to breathe again after a long hiatus due to the COVID 19 pandemic that saw many of the smaller enterprises being absorbed, dissolved or bought over, leaving only the ‘big boys’ to ply the market.
However, after the lockdowns were removed, the construction industry ‘sprang back to life’ almost instantly due to the various infrastructure developments worth billions, many construction equipment suppliers got back into the game. Thanks to the initiatives taken by governments across the world, contractors and OEMs alike are opting to rent equipment to construction companies rather than sell these machines which render the scenario a win-win. This business strategy is practical and plays out well attributed to the high cost of equipment such as excavators and cranes that could have a negative impact on a construction company’s cash flow status.
Despite the severe impact of the pandemic the rental market did not shrink between 2018 and 2022, this was due to the fact that small scale construction exploded during the pandemic as millions of home owners decided to embark on small scale renovations on their homes (home improvement projects) which required them to take mini excavators for the most part for hire. Especially in large cities such as Melbourne excavator hire has seen tremendous growth as the shortage of professional tradesmen are in short supply due to overdemand.
This phenomenon was not observed to be isolated; as a matter of fact the market presented the same trend in Europe, Asia Pacific and North America where most construction equipment rental businesses managed to survive in major cities. Analysts attribute the resilience of the industry directly to urbanization and infrastructure projects that were primary drivers towards the expansion of the market.
From a market development perspective, pricing was also crucial as rental companies competed with each other resulting in lower prices especially for the excavator rental market. This was an appealing scenario for project managers who managed construction companies as their budgets were eased due to the lower rental rates. Most excavator rentals came with packages (pricing incentives) that took into account equipment value, duration of rental and market demand which resulted in a range of discounts being offered as promotions.
The fact that construction companies do not use these machines 24/ 7 is another factor that drives the market forward as equipment such as excavators are only utilised at specific times and construction companies that own their own excavators and cranes for example find it a waste that their equipment are at times left idling in storage – it is in essence money that is not generating revenue when these machines are not in use indicated a market observer.
Added to the fact that these types of equipment carry high ownership costs, even when they are not in use, it has become practical for project managers to hire rather than purchase.
