How is the crane rental market changing?

(Photo: Reuters/Hollie Adams)

The crane rental market worldwide remains significantly influenced by the oil and gas sector, though there is much development in wind farm work, particularly with new projects offshore.

Other renewable sectors are gaining in popularity and require the use of cranes but oil and gas remains prominent and cranes are still used for installation, maintenance and transportation of large pieces of equipment for work in this sector.

(Photo: Adobe Stock)

Construction remains a massive sector for crane rental, with projects for housing, retail and commercial buildings, as well as transport hubs such as airports and railway stations helping to positively influence the industry’s forecasts. Regions like the USA and China dominate with mega construction projects and a plethora of plans, but Europe, the Middle East and the rest of the world are also seeing a rise in work.

Many of these projects opt for crane rental services rather than outright purchase due to the substantial upfront costs. The high cost of not only new models but also the costs associated with crane operation and maintenance of existing fleets, is often a barrier to new, smaller companies entering the market.

There is also the skills shortage that often comes up in conversation – that a skilled but aging workforce is difficult to replace, and the crane rental industry is making every effort to attract younger operators and skilled workers to the sector. Several upskilling training programmes are in place and offer promise, while other players have chosen to form partnerships and collaborate on projects to overcome equipment and worker shortages.

American forecast

The ARA says the rental industry in the USA could reach $79.2 billion this year. (Photo: onionastudio via Adobe Stock)

The equipment rental industry in the USA could reach US$79.2 billion this year, according to the latest forecasts from the American Rental Association (ARA).

In its updated forecast, the Association said the USA equipment rental industry’s growth projection has increased since last quarter, with most current projections indicating a 9.7 per cent increase.

That represents an increase of 2.8 % on previous estimates, which forecast a total of $77.3 billion.

Tom Doyle, ARA vice president programme development, says, “The 2024 ARA forecast through the lens of our exclusive rental revenue model, and survey results gathered from members, confirms the continuation of a growing rental industry.”

Scott Hazelton, managing director, S&P Global, adds, “There has been no serious bust, thus, there is no serious boom. The outlook remains steady and inflation is falling. The growth rates tail off in the future years, with growth of 3.8 % in 2025 and 3.1 % in 2026.”

According to Jeff Vance, senior vice president of operations services, Sunstate Equipment the S&P forecasts are in line with its own, which predict a softer winter and spring than usual and used equipment prices softening.

Canadian rental up

Elsewhere, Canada’s equipment rental revenue is projected to have 7.2 % growth this year, totalling $5.79 billion.

General tool and construction and industrial equipment (CIE) are both expected to see growth, with general tool revenue projected to be up 6.8% to $1.08 billion, up from last quarter’s projection of $954 million.

Revenue is projected to increase 9.7 % this year to $16.6 billion and investment is expected to expand in 2024 and beyond.

Electric tech

Darryl Cooper, president, Cooper Equipment Rentals, says, “Our experience mirrors what ARA is reporting. Despite headwinds in the residential market, revenues are up, with western Canada stronger than eastern Canada.”

In terms of the supply chain, Sunstate said there has been a loosening, with fleet and parts easier to get hold of.

In addition, Vance said new vendors have been introduced into the market with new technology; “We’re doing a lot of investigation into electrification,” he says. “The power grid is always a topic in our minds. But, more electrification is coming, so we must be prepared to service our customers in those ways.”

European challenge

Martin Seban, director at KPMG, recently presented an overview of Europe’s rental industry current landscape and future outlook in a keynote session at the ERA Convention in Lisbon, Portugal.

Softer demand

Martin Seban, director of KPMG at the ERA Convention in Lisbon

Seban provided an updated forecast on individual European markets, showing mixed results.

In the UK, 2024 growth has been downgraded by 1.2 % to 1.5 %, and 2025 growth is expected to drop by 2 % to 2.5 %.

Germany is now forecast to see 3 % growth in 2025, down by 1.4 % from earlier forecasts.

Spain and Italy have maintained steady investment due to EU financial support, with projected growth of 5.5 % and 3.5 % respectively next year.

The Nordic region faces the biggest downgrades for 2025, with Norway down by 5.1 %, Sweden by 2 %, and Finland by 2.8 %.

Modest expansion

Seban noted that as the rental industry diversifies and targets new end markets, it becomes more connected to the global economy. He opened his presentation with a sobering statistic.

After a post-Covid GDP growth of 6.2 % in the Eurozone in 2021, the past two years saw more modest growth of 3.5 % and 0.5 %, respectively.

The outlook for the next 18 months is also uncertain, with forecast growth of 1.3 % for 2024 and 1.5 % for 2025.

Seban said, “Since 2023, we’ve seen a real slowdown in activity for various reasons, including inflation rates, which prompt central banks to raise interest rates, slowing the economy.”

Despite these challenges, Seban highlighted some positives: “The NextGen EU programme, which allocates up to €800 billion by 2027, is a significant opportunity. Based on the criteria, countries like Spain and Italy could see up to a 10 % GDP boost from EU financial support, whereas Germany and France might see less than 2 %.”

Impact on construction

The construction industry shows a similar trend. After a 5.3 % recovery in 2021 and a 2.7 % increase in 2022, this year is forecast to see a 2.1 % decrease. Modest growth of 1.5 % is expected by the end of 2025.

Concerns are particularly acute in the residential construction market, which accounts for an estimated 49 % of construction activity in Europe.

KPMG has revised its outlook downward due to an “accentuated contraction of the new residential market,” leading to the lowest confidence in the sector since the pandemic began.

As of 2023, KPMG estimates that 65 % of the equipment rental industry in Europe is linked to construction. The slowdown in residential construction, declining customer confidence, and rising interest rates are thus significantly impacting the rental industry.

Seban states, “Residential construction, in particular, is a significant portion of the business alongside non-residential, both suffering greatly and accounting for the major shifts in revenue generation across Europe. The impact varies by country due to market maturity and diversification, as well as the size of the construction segment.”