The global heavy construction equipment market size was valued at USD 193.10 billion in 2022. It is estimated to reach USD 274.84 billion by 2031, growing at a CAGR of 4.0% during the forecast period (2023–2031).
Heavy construction equipment is equipment or vehicles used for construction activities such as excavation, material lifting, tunneling, and material handling. Common heavy construction equipment includes tippers, dumpers, motor graders, dozers, loaders, and excavators. The mechanical advantage of heavy equipment multiplies the ratio between the input force provided and the force exerted, making operations that would require hundreds of people and weeks of labor without heavy equipment significantly less labor-intensive. Some equipment is propelled primarily by hydraulic drives. Hence, these machines aid in improving the output rate through work progress, decreasing the need for people, boosting efficiency, speed, and safety on a broader scale, and decreasing the time limit of processes and overall building costs. Heavy construction equipment is widely used in the mining, manufacturing, infrastructure, building, and oil and gas industries.
The construction sector of Asia-Pacific and LAMEA is estimated to grow due to the government's plan to complete several infrastructure projects. These projects include the construction of regional airports, roads, rail networks, and power plants. For instance, in October 2019, Saudi Arabia's Public Investment Fund planned to invest USD 10 billion in Brazil, which includes the construction of a 600 km railroad from the Mato Grosso to Para in the Northern part of Brazil.
Similarly, in October 2019, the government of South Korea and the Inter-American Development Bank (IDB) collaborated to invest around USD 1.3 billion in Latin American smart city projects. The construction sector in most of Latin America rebounded in 2021 after a period of slowdown caused due to low consumer confidence and a lack of investment in the past few years. The construction sector has recovered from this, mainly in countries such as Brazil, Colombia, and Peru, which is anticipated to drive the growth of the heavy construction equipment market.
Public–Private Partnerships (PPP) are joint ventures between the government and private sector companies to construct public infrastructure systems. In this type of partnership, a private company handles the project and lends technical and operational expertise to government projects. The country can achieve greater efficiency and sustainability in public services with its potent combination of public and private capital. After emerging from an economic slowdown, the developing countries have strengthened PPPs to boost infrastructure investments and the growth momentum. Furthermore, Latin America has overcome the debt crisis, hyperinflation, and political stability to become a lucrative market for foreign investment.
Heavy construction equipment uses diesel as its energy source for operations. Diesel emits many carbon footprints that are hazardous to the environment. Increased carbon emissions pose a significant challenge for the heavy construction equipment market. The government of several countries in the region has imposed stringent regulations for heavy construction equipment machines to reduce carbon emissions.
Fluctuating oil prices are a crucial factor affecting the growth of the heavy construction equipment industry around the globe. Factors such as a hike in duty, tax on oil purchases, and restrictive regulations lead to increased oil prices. It is one of the major restraints that hampers the growth of the heavy construction equipment industry, as the cost of heavy construction equipment depends on oil prices.
Construction equipment manufacturers have focused on their R&D activities to develop energy-efficient machines and enhance the fuel savings of existing machines. Fuel consumption and carbon emissions are significant concerns for most construction companies. It was observed that these companies spent more on fuel than on machine maintenance. Fuel expenditure accounts for a substantial portion of the overall construction expenditure. Heavy construction equipment manufacturers have launched several machines with high fuel efficiency.
Construction companies are reluctant to invest in heavy equipment that consumes less fuel due to their high prices compared to conventional machines. Extensive R&D activities conducted by equipment manufacturers would enable them to develop low-cost machines with better fuel efficiency and lower carbon emissions. For example, Caterpillar Inc. offers a 336E H hybrid excavator, which lowers fuel consumption by around 25%. It also produces a 996K XE wheel loader fitted with a new, step-less powertrain system to reduce fuel consumption. Such advancements are expected to create tremendous market growth opportunities.
The global heavy construction equipment market is segmented by equipment type, application, and end-user.
Based on equipment type, the global heavy construction equipment market is bifurcated into earthmoving equipment, material handling, heavy construction vehicles, and others.
The earthmoving equipment segment owns the highest market share and is projected to exhibit a CAGR of 3.4% over the forecast period. Earthmoving equipment, such as a wheel loader, is generally used at the construction site for digging and moving unwanted soil from one place to another. These loaders are broad square buckets on the end of changeable arms to lift and move material. Wheel loaders, excavators, and skid loaders are machines utilized for earthmoving operations. Currently, manufacturers such as Caterpillar Inc., Volvo AB, and JCB focus on developing earthmoving machines that deliver fuel savings and higher efficiency through improved engines and control systems. Furthermore, the new technology excavator with enhanced output, cost-effectiveness, higher performance, and flexibility is crucial in increasing the demand for earthmoving equipment.
Heavy construction vehicles like dumpers and tippers carry bulk material on construction sites. Due to their large capacity, dumpers are primarily used in mine and construction activities. A steady increase in construction activities and mining operations has led companies to develop high-capacity dumpers combined with high-powered engines for better performance. Moreover, the dumpers carry bulk material for road construction activities. Companies are focusing on developing dumpers and tippers with enhanced features such as a new traction control system, ACERT diesel engine, and essential information management system software, ensuring high productivity and low operating cost. Such factor offers lucrative growth opportunities for the market growth during the forecast period.
Based on application, the global heavy construction equipment market is divided into excavation and demolition, heavy lifting, tunneling, material handling, and recycling and waste management.
The excavation and demolition segment is responsible for the largest market share and is anticipated to grow at a CAGR of 3.1% over the forecast period. Excavation is a process that involves digging of rock, soil, and raw material, usually from archaeological sites, which is carried out using earthmoving equipment, such as excavators, loaders, cranes, telehandlers, and others. The process includes different activities such as cutting, trenching and cracking. The demolition involves tearing down a building with cranes, excavators, and bulldozers. In addition, excavation equipment helps in trenching and digging activities. Excavators, cranes, and dozers are used for excavation and demolition activities. The companies such as JCB and AB Volvo offer excavators such as JS205LC, which provide better fuel efficiency with higher productivity and performance. This excavator can perform road construction, earthwork, and quarrying operations and has an output capacity of 30 tons.
Tunneling is constructing an underground passage through a mountain, beneath a city, or under a waterway. Crawler excavators, crawler loaders, and wheel loaders are used for tunneling construction. Manufacturers are focusing on developing special excavators for tunnel construction, which is estimated to drive the demand for this segment in the heavy construction equipment market. For instance, the Liebherr Group's R 944C Tunnel Litronic Excavator offers safety standards, such as the Family Object Protection System (FOPS), Rollover Protection System (ROPS), and increased engine power and hydraulic system.
Based on the end-user, the global heavy construction equipment market is segmented into infrastructure, construction, mining, oil and gas, manufacturing, and others.
The construction segment is the highest contributor to the market and is estimated to grow at a CAGR of 3.8% during the forecast period. Construction equipment such as loaders, backhoes, excavators, motor graders, cranes, dumpers, and tippers are utilized for construction activities. Manufacturers are continuously designing advanced products with advanced technology and increased performance. Furthermore, the increase in demand for construction equipment is anticipated to fuel the market growth over the next few years, as heavy equipment, such as excavators, loaders, and motor graders, are essential components used in construction activities. For instance, in November 2019, Cyrela Brazil Realty and Canada Pension Plan Investment Board (CPPIB) collaborated to invest around US$240 million to develop residential properties in the southeast region of Brazil.
Manufacturing involves using machines, tools, and labor to produce goods for use or sale. Heavy machines are used for performing production operations. Forklifts, cranes, and hoisting equipment are used in warehouses and manufacturing factories for lifting and handling goods. Material handling and storage are crucial to the industrial business, as incorrect material handling increases expenses. An increase in industrialization and urbanization is expected to accelerate infrastructural development. In addition, the rise in the application of forklifts and hoisting equipment in the manufacturing industry boosts market growth.
Based on region, the global heavy construction equipment market is bifurcated into North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific is the most significant global heavy construction equipment market shareholder and is anticipated to grow at a CAGR of 5.1% during the forecast period. China has a substantial share of the construction equipment market in consumption and manufacturing. However, due to rapid technological growth, developing countries such as India, Singapore, Hong Kong, Taiwan, and others have been recognized as important markets. Some of the significant players operating in the Asian market include Komatsu (Japan), Hitachi Construction Machinery (Japan), XCMG (China), Doosan Infracore (South Korea), and Sany (China). Furthermore, according to the report published in 2018 by the Overseas Development Institute (ODI) based in London, the Asian regional economy increased by 6% in 2017 and is projected to grow significantly until 2025. This influences the overall growth of construction and manufacturing facilities in these regions. Thus, improving overall production facilities is anticipated to create opportunities for developing the construction equipment market in this region.
Europe is estimated to exhibit a CAGR of 2.4% over the forecast period. Governments in this region have enforced stringent laws in Europe regarding carbon emissions. Hence, companies are innovating equipment to match European emission standards. Construction equipment has become more fuel-efficient and performance-oriented. In addition, the major players, such as Volvo Construction Equipment, Liebherr, and JCB, are headquartered in Europe, thereby having a strong foothold in the region. Such factors positively affect the growth of the construction equipment market in Europe. Construction equipment is primarily used in the construction and industrial segments in Europe. Further, the major countries in the region, such as Germany, the UK, and France, are major developmental hubs for the production and energy industries, which further creates demand for construction equipment in these countries. This, in turn, is anticipated to stimulate the expansion of the construction equipment market.
In North America, the construction equipment market is experiencing growth owing to the rise in commercial infrastructure construction and old construction repair. The major construction equipment manufacturers focus on the North American market, mainly due to the region's high adoption rate of compact construction equipment. The rise in construction equipment consumption has led to intense R&D in construction machinery. These advancements will equip users with the right solution. There are numerous producers in this sector, with Caterpillar being one of North America's most significant equipment manufacturers. Presently companies are offering technically advanced construction equipment in this region; for example, Volvo Construction Equipment (VCE) recently introduced a mobile app to update its customers with the latest products, resources, and other related information regarding construction equipment. This app works even without internet connectivity. Such factors offer lucrative growth opportunities for market growth during the forecast period.
LAMEA includes regions of Latin America and the Middle East and Africa. Emerging regions such as Latin America focus on establishing new manufacturing hubs for construction equipment and accessories. In contrast, South Africa has the highest growth potential for establishing construction equipment manufacturing. The Middle East is expected to create demand for professional construction equipment due to increased construction activities. Major construction equipment manufacturers have established subsidiaries to promote better sales and services in developing regions.
Furthermore, the adoption of construction equipment is expected to increase in the Middle East, owing to the demand from industries, mainly oil and gas and construction. In addition, the developments in battery technologies and brushless DC motors can increase the popularity of electric construction equipment in manufacturing facilities mainly concentrated in Latin America and Africa. This is expected to boost the expansion of the market for heavy construction equipment.
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