Industry News

  • Why are GCC contractors opting to rent machinery?

    Since time immemorial, equipment procurement professionals the world over have been faced with one overarching question: to buy or not to buy?

    Occasionally, the answer to this question is straightforward. If you require a niche machine to perform a specific task for a limited period, for example, it makes sense to either rent or to enlist the services of a specialist sub-contractor. Conversely, if you’re likely to use a machine day in, day out until its engine will no longer start, it’s probably best to have your name on the registration document.

    But this argument is not always so one-sided. Owning a large fleet of machinery is far from ideal if your project pipeline dries up unexpectedly. It can be equally frustrating to have to turn down a major contract due to scarcity of equipment.

    In the Middle East’s current construction market, where uncertainty is rife, fleet managers are in an unenviable position.

    On a global level, the construction equipment rental sector certainly seems to be gaining momentum. The value of the market is expected to increase significantly during the next eight years.

    According to a report published by Global Market Insights in January 2017, the value of the construction equipment rental market is on track to hit $75.18bn by 2024. Factors such as lower administrative overheads, reduced maintenance costs, and the need to comply with stricter regulations, are expected to drive growth in the market, according to the authors. Improved leasing options have also served to enhance overall customer service by ensuring high product quality, shorter response periods, timely delivery, and scheduled pickups, they added.

    According to Global Market Insights: “The [construction] industry is characterised by increasing natural gas drilling activities, coupled with augmentation of the highway network and formation of smart cities. This will lead to a corresponding demand in the construction equipment market, and also give impetus to the rental sector.

    “Commercial and residential real estate has also driven construction equipment market size,” the report continued. “Developing technology with greater efficiency and accuracy in material handling has placed high emphasis on safety and productivity at the workplace.”

    The earthmoving machinery market, which includes products like excavators and wheel loaders, is expected to be worth more than $40bn by 2024. The value of the concrete and road construction equipment segment, meanwhile, is likely to grow to more than $10bn during the same period, according to Global Market Insights.

    As original equipment manufacturers (OEMs) continue to develop autonomous and semi-autonomous machines, large rental companies are expected to offer these technologies to their customers in a bid to improve onsite performance and safety, and to reduce energy consumption.

    Having recognised the segment’s growing importance, some manufacturers have begun to produce models specifically designed for rental companies and their customers. And technology is not the only consideration when it comes to machines tailored for this market; factors like operational simplicity and ease of maintenance also represent key focusses.

    Such trends are especially pronounced within the field of access equipment, which has long since been a mainstay of the equipment rental segment.

    Michael Maynard, regional operations director for international rental company, Rapid Access, says his team has witnessed increased demand in the Middle East, although this growth has varied from country to country.

    “Last year was a good year within certain markets, and a mixed year in others,” he tells Construction Week. “Rapid Access saw a downturn in Saudi Arabia. However, our UAE, Qatar, and Kuwait businesses witnessed phenomenal growth, which more than offset the decline in the kingdom.”

    Courtesy Construction Week

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