Construction Equipment Rental Market

Market Overview

The global construction equipment rental market size was valued at USD 102.94 billion in 2022. It is projected to reach USD 149.07 billion by 2031, growing with a CAGR of 4.2% during the forecast period (2023–2031). A rise in construction activities in developing countries and a reduction in expenses drive market growth.

Construction equipment rental is the service of renting construction equipment to end users for a specified period of time through the execution of contracts containing usage terms and conditions. Construction equipment is primarily used on construction and mining sites to facilitate heavy operations. A rise in construction and mining activities in developing nations of Latin America and Africa fuels the expansion of the construction equipment rental market. In addition, renting equipment for the required time reduces costs associated with equipment maintenance, high operational costs, and high wages of skilled operators, which significantly contributes to the expansion of the global market. In addition, the high initial investment required to purchase equipment and financial constraints can be avoided by opting for rental equipment, thereby boosting the market growth.

Market Dynamics

What are the factors driving the market growth?

A Rise in Construction Activities in Developing Countries

Ongoing construction projects have been witnessed for malls and offices in developing nations of Asia, Africa, and Latin America. For instance, around 100 malls have been built in Latin America since 2017. These malls are multistoried and are constructed on multiple acres of land, which fueled the demand for construction equipment. Furthermore, rapid industrialization in developing countries has led to the construction of new and luxurious office spaces in major cities. For instance, over 17 major IT parks have been built in India in the last couple of years in major cities such as Mumbai, Delhi, Pune, Bangalore, and Hyderabad. In addition, several housing projects are under construction in Africa. Such infrastructure projects need construction equipment for operation. This equipment is rented and used at these sites, which drives the market's growth.

Reduction of Expenses

Considering the heavy operations that are carried out at construction sites, construction equipment is likely to break or damage frequently. Similar to any other vehicle, construction equipment is required to be timely maintained by undergoing regular servicing and maintenance to keep them smoothly working. These factors make it easy for customers to hire this heavy and expensive equipment with a well-trained operator only when needed. This helps to minimize the expense in the form of wages of the operators as well as the expenses incurred due to their maintenance.

What are the factors restraining the market growth?

Lack of Skilled and Qualified Operators

Heavy and advanced construction equipment needs trained operators to operate it, as they are equipped with various levers and gears, making them function appropriately. However, one wrong move can lead to several problems, such as failure to carry out the desired operations. Furthermore, an equipment operator has to undergo training and get licensed to operate these heavy machines. For instance, in India, it is mandatory for the operator to have a valid government-approved license to operate these heavy machines. Therefore, not all can commercially operate the equipment at the construction site. However, some equipment rental companies train people to operate such machines, which takes time and money for the companies to train them. Thus, the shortage of trained operators is a major restraint of the global construction equipment rental market.

What are the future opportunities for the market?

IoT Technology

New technologies such as IoT installed in construction equipment have made it easy for rental companies to track the location and operations of the equipment. IoT is helping to overcome skilled labor shortages, improving work precision, assuring on-time delivery within the budget, and helping to overcome safety issues with the equipment. Thus, the introduction of new equipment connected to the internet is expected to boost the expansion of the construction equipment rental market during the forecast period.

Regional Analysis

The market for construction equipment rental is divided into four regions: North America, Europe, Asia Pacific, and LAMEA.

North America is the largest contributor to the global market and is anticipated to maintain its position over the forecast period with a 4.2% CAGR. The market is growing owing to a rise in construction activities of commercial infrastructure and an increase in mining and renovation in the U.S. and Canada. Furthermore, the U.S. is a major manufacturing hub of construction equipment for many companies such as Caterpillar, Volvo, and John Deere, which is an advantage for rental companies, as manufacturers also provide services and maintenance of the equipment.

Europe is the second largest market and is growing with a CAGR of 3.7%. The major players, such as Volvo Construction Equipment, Liebherr, and JCB, are headquartered in Europe and have a strong foothold in the region. The implementation of construction equipment for material handling and earthmoving applications assists in saving time as well as providing higher efficiencies at the same time to the end users. The countries such as Germany, the UK, France, and others are major developmental hubs for the manufacturing and energy industries, which further creates demand for construction equipment on rent in these countries. This, in turn, is anticipated to drive the growth of the construction equipment rental market.

Asia Pacific is the fastest-growing market, registering a CAGR of 5.9%. China holds the major share of the construction equipment rental market. However, other countries such as India, Singapore, and Taiwan have been recognized as important markets owing to the upsurge in construction activities in these countries. Herc Rentals, Kanamoto, and Shanghai Pangyuan Construction Equipment Rental Co., Ltd. are a few of the prominent players operating in the Asian market. Major players are striving to develop their presence in these markets to improve their customer base as well as serve the Asian industries, including construction, oil & gas, and mining. Thus, the improvement in overall construction activities in the Asia-Pacific region is likely to create opportunities for the growth of the construction equipment rental market in this region.

LAMEA region is also expected to grow significantly over the forecast period. Middle East accounts for a major share of this market; however, Africa is anticipated to experience the highest rate of growth over the forecast period. Emerging regions such as Africa are focused on establishing new mining activities along with infrastructural development. South Africa has the highest growth potential for the construction equipment rental market, owing to various construction projects. Major construction equipment manufacturers have established subsidiaries to promote better sales and services in developing regions. For instance, Robert Bosch has subsidiaries such as Robert Bosch Middle East FZE, Robert Bosch Latin America, and Robert Bosch (Pty) Ltd., which operate in the Middle East, South America, and Africa, respectively. This encourages rental companies to buy the equipment as they get desired service and maintenance in the long run of their businesses. These strategies notably contribute to the growth of the LAMEA market.

Segmental Analysis

The global market for construction equipment rental is segmented based on application, product, and propulsion systems.

By applications, the market is segmented into excavation & mining, material handling, earthmoving, and concrete.

The earthmoving segment holds the highest revenue share, registering a CAGR of 5.1%. Earthmoving is a process of moving materials such as dirt, stone, and land. Mostly, loaders are used for earthmoving, including bucket loaders, front loaders, payloaders, and wheel loaders. These loaders are used as a wide square bucket on the end of changeable arms to lift and move material. New technology excavator ensures improved output, cost-effectiveness, higher performance, and flexibility in earthmoving operations. These key features provide the construction equipment facilitate multifunctioning, thus providing a competitive edge.

Based on product, the market is divided into backhoes & excavators, loaders, crawler dozers, cranes, forklifts, and others.

The loaders segment holds the highest revenue share and is growing with a CAGR of 3.5%. A loader is used for earthmoving operations, which include loading and moving materials such as dirt, demolition, recycled material, raw material, and sand. Different types of loaders are available in the market, some of which include front loaders with attached front buckets and small backhoe loaders. Front loaders are widely used in urban engineering projects and small earthmoving works.

Based on propulsion type, the market for construction equipment rentals is divided into electric and ICE.

The ICE segment holds the highest revenue share and is expected to grow at a CAGR of 4.1%. This segment includes traditional construction equipment that is operated on internal combustion engines (ICEs) and is generally diesel operated. Currently, construction equipment operated on ICEs can generate more power and torque than electric-operated components. ICE equipment can carry heavier loads and are more stable and safer in comparison with electric-operated components.

Recent Developments

• October 2022- H&E Equipment Services Inc. announced that its acquisition of One Source Equipment Rentals Inc. had been completed. With the completion of the transaction, H&E expanded its branch network by ten equipment rental locations, including initial locations in Illinois, Indiana, and Kentucky.
• November 2021- Rapid Equipment Rental Limited was acquired by Herc Holdings Inc., a North American equipment rental supplier operating through Herc Rentals Inc. Rapid is a full-service equipment rental company with seven locations serving the Greater Toronto Area's construction and industrial clients.