Heavy Equipment Rental Industry Report

The heavy equipment rental industry is a multi-billion-dollar market that continues to thrive and evolve along with economic growth and increasing infrastructure investments. Renting versus purchasing heavy machinery gives companies a cost-effective solution for access to the newest equipment without the upfront investment and maintenance costs that come with ownership. 

Industry performance hinges largely on activities of downstream markets, such as transportation & logistics, heavy construction, and oil exploration & drilling. Overall economic growth has supported growth in construction and industrial activity and has supported industry revenue. Higher demand from downstream transportation and mining sectors is expected to stimulate industry performance. 

Key Market Trends

Increasing government spending on public infrastructure and the development of smart cities is expected to propel growth in the construction equipment rental market. Among the growth drivers in the global construction equipment market include:

• Large investments in new equipment

• A growing trend toward automation

• A thriving equipment rental industry in North America 

• Increasing demand for high-tech and advanced construction equipment 

• Growing mining and construction industries on a global level

• A growing need for construction machines to ensure worker safety 

• High rates of urbanization 

• The continued development of smart cities  

In the current economy, and due to the cyclical nature of the construction industry, the advantages of renting construction equipment have become magnified. The high initial purchase cost of new equipment is driving contractors and construction companies to look toward equipment rental. Some of the market factors contributing to the high demand include high taxes, maintenance, high depreciation costs, and equipment insurance for new machines. Additionally, because the construction industry is highly influenced by market fluctuations, equipment rental protects businesses from unpredictable financial downturns. More widely available technologically advanced rental equipment is also driving market revenue.  

Advancements in technology have brought many new features to the equipment rental sector. Manufacturers of construction equipment are focusing on advanced safety features such as lift assist, 360-degree cameras, and additional work lights. They are also focusing on systems that improve operational efficiency and require less maintenance. Because these features carry a high price tag, they’re not affordable to small builders and contractors, causing them to turn to the rental of construction machinery. This also allows them access to the most upgraded and advanced equipment without the hefty investment that comes with the added risk of quickly becoming outdated. Additionally, artificial intelligence, the Internet of Things, and telematics are all being used to enhance the efficiency of equipment and reduce costs while increasing profitability. This offers companies the benefits of advanced technological innovations without the high ownership pricetag.

The digitalization of equipment rental services, including the Internet of Things (IoT) and artificial intelligence (AI), is also driving market growth. The IoT allows companies to:

• Track asset movement

• Gain more visibility and control

• Extend the lifecycle of equipment

• Lower costs through more carefully tracked data metrics, inventory tracking, and reduction of human errors

AI is being used for customer relationship management (CRM) to better understand customer preferences and behaviors, as well as more accurate order tracking and delivery information. This helps rental companies be more adaptive by automating relationship management and offering better support.

The way that rental services are delivered is also being transformed. Online rental platforms, mobile apps, and real-time equipment monitoring are creating more convenient and efficient options for renters. Rental companies that offer tailored solutions and extensive customer support are growing because they cater to construction firms seeking flexible rental agreements and specialized equipment for assorted project needs.

The growing trend of electric construction equipment is another major factor in the industry's growth. More companies are focusing on lowering their carbon emissions by adopting novel electric construction equipment.

Government spending on infrastructure development will boost the earthmoving and road-building equipment market, with a rise in industrial and infrastructural construction projects leading to increased demand for excavators, loaders, and backhoes. Earthmoving equipment also has a massive demand in the construction and mining sectors and offers lucrative opportunities worldwide.

Waiting to sell? Don’t miss out.

The material-handling segment continues to grow due to the high demand for crawlers, truck-mounted cranes, and trailer-mounted cranes needed for massive infrastructure projects. The truck-mounted crane segment is seeing significant growth due to the construction of bridges, dams, and large buildings. More construction of skyscrapers and huge infrastructure projects are expected to boost demand for these types of machinery rentals. Truck-mounted cranes have a majority share in the construction equipment rental market because of easy mobility. In contrast, traditional crawler cranes have seen a steep fall in demand over the last decade because they are difficult to transport on long distances and have lower material-handling capacity.

Power equipment rental, or power on hire, offers several advantages over purchased power equipment. Rented generators provide flexibility, carry lower maintenance and installation costs, are available on short notice, and offer lower initial prices. Power outages are increasing the demand for reliable backup power sources in both industrial and commercial sectors, driving the adoption of power rental equipment. Additionally, mining activities are among the highest energy consumers from generators, as most mining activities occur in more remote areas outside the power supply grid. This part of the sector is expected to experience significant growth in the future. 

The oil and gas sector is expected to contribute to the growth of the equipment rental market because of increased exploration. As the industry increases its activities, the need for rental equipment to support these activities will also increase. Oil and gas exploration activities are projected to contribute significantly towards future market expansion. The drilling rig sector is expected to dominate the market due to the increasing exploration and production activities. Also, advancements in deepwater drilling activities around the world are expected to create ample opportunity for market players in the coming years.

Regions that are undergoing rapid industrialization and infrastructure development provide major potential for rental services. Also, expansion into emerging markets offers new opportunities for industry players. For example, the concrete and road construction machinery segment is growing as many developing countries are focusing on better road connectivity and megaprojects. China’s incredibly ambitious “One Belt, One Road” initiative is designed to connect China with European countries and has a target completion date of 2049. It is a debt-financed strategy that involves more than 60 countries. These types of projects are increasing the demand for concrete and road construction machinery globally. The rental of concrete mixer trucks and construction pumps is anticipated to gain significant market share.

The North American equipment rental market is being driven by an increasing demand for advanced and fuel-efficient construction equipment due to its cost-effectiveness and standard safety features. Many construction companies have switched to renting to serve their rising needs. Also, an increase in government initiatives focusing on public infrastructure and government utilities is projected to fuel the adoption of material-handling equipment and cranes in North America. Canada has allocated billions of dollars in infrastructure projects to strengthen the economy, including water infrastructure and other strategic infrastructure projects.

M&A

The global heavy equipment rental market has numerous domestic and regional participants, creating a highly fragmented market, which is highly driven by mergers and acquisitions and joint venture activities. Consolidation is a key priority in the sector. Industry players are looking toward acquisition strategies to grow their fleet sizes and market share. These businesses are also focusing on fleet maintenance & improvement to make sure that equipment technology is upgraded, and making strategic investments in research & development while focusing on expansion plans. In North America, major industry players are substantially investing in the development of innovative construction equipment. They are also forming strategic partnerships with financing partners involved in refinancing. 

Other factors driving M&A in the equipment rental industry include companies partnering with other companies that have specific expertise in an area that the first company may lack. Another driving factor is cost savings through collaboration with another company to help reduce costs for both parties. Access to new customers and new resources is another critical reason for partnering with another company that has a strong presence in a new market. Additionally, partnering with other companies can boost innovation, leading to the development of new products, services, or technologies that help drive growth and revenue. 

Our Recent Success Stories in the Sector

Some of Benchmark International’s recent successful deals in the heavy equipment rental space include:

• The transaction between Clark Crane and Capital Extension Crane & Lift

• The deal between RS Equipment Company LLC, DBA Hotsy Carlson Equipment Company, and Texas Enterpries, Inc.

• The transaction between Access Truck Parts and Summit Hydraulics

• The sale of TDS Erectors Inc, (DBA. TDS Erectors & Crane Service) to Capital Extension Crane & Lift, which was named Industrial Services Deal of the Year by the Global M&A Network

Schedule a Call