U.S. Construction Equipment Rental Market - Strategic Assessment & Forecast 2023-2029

The U.S. construction equipment rental market size was estimated at USD 39.2 billion in 2022 and is expected to reach USD 54.17 billion by 2029, growing at a CAGR of 4.73% during the forecast period. In 2021, the Biden-Harris government signed the Bipartisan Infrastructure Law (BIL), which focused on promoting the nation’s infrastructure and competitiveness by rebuilding roads, bridges, ports, and airports. It also included the upgradation of rail systems and providing cleaner and cheaper energy. Investment in the construction industry during November 2022 was recorded at USD 1,807.5. Private construction received worth USD 1,426.4 billion in investment during the same period. The launch of BIL is focused on upgrading and renovating the nation’s aging infrastructure and is expected to propel the U.S. construction equipment rental market during the forecast period.

KEY HIGHLIGHTS

• In the U.S. construction equipment rental market, the material handling segment of the overall rental construction equipment accounted for the largest industry share in 2022. In the material handling segment, aerial platforms accounted for the largest share in 2022.
• The construction of various infrastructure and residential projects in the country is expected to drive the demand for renting aerial platforms in the U.S. construction equipment rental market. For instance, the Denver-based architect, Tres Birds, announced the development of the tallest mass timber building in 2022.
• The Portal Bridge Enhancement Project, with a total value of USD 1.65 billion, involves the construction of a 3.92 km, two-track, high-level, fixed-span railway bridge over the Hackensack River in New Jersey. The construction commenced in 2021 and is estimated to be completed in the fourth quarter of 2026. The project would replace the 111-year-old swing bridge, enabling marine traffic to sail underneath smoothly. The project will improve service throughout the northeast corridor. It is expected to boost the demand for rental road construction machinery in the United States.
• Intel announced its plans to build two chip factories in Ohio in 2021, with an investment of more than USD 20 billion. Phase 1 of the project is estimated to create 3,000 intel positions and 7,000 construction jobs. The construction is planned to begin in 2022 and is expected to be complete in 2025. Additionally, General Motors Co. has planned to invest USD 7 billion in developing four manufacturing factories in Michigan. The investment would create 4,000 new jobs.
• JPMorgan Chase World Headquarters in New York is a skyscraper under construction; the height of the building is designed to be 1,388 feet with 63 floors. The construction commenced in 2021 and is expected to be completed in 2024. This tower is designed to be the city’s largest all-electric tower with net-zero operational emissions and would include a large ground-level outdoor space with green areas. The project will boost the demand for renting aerial platforms in the U.S. construction equipment rental market.
• The manufacturing industry received USD 121.3 billion worth of investment in 2021. The largest investment is in chemical manufacturing (USD 63.2 billion), computers, and electronic products. Real estate, rental, and leasing investments were also prominent, receiving USD 43.8 billion in 2021. Additionally, greenfield investment was recorded at USD 3.4 billion in 2021.

Government Investment In Public Infrastructure Boosting The U.S. Construction Equipment Rental Market

• The Federal Aviation Administration (FAA) announced an expenditure of USD 3 billion for 3,075 airports all over the U.S. to improve terminals. On the other hand, the U.S. Army Corps of Engineers (USACE) floated USD 3.9 billion to improve supply chains and strengthen ports and waterways. It includes over 16 construction projects across ten states.
• Development of the high-speed rail system in California would include 800 miles of rail, with up to 24 stations. The project will connect San Francisco to Los Angeles, extending to Sacramento and San Diego. The rail would run along 1,287 km and is estimated to be completed in 2033. This project is the first high-speed train system implemented in the US. It is estimated to cost USD 68 billion, and the investment by the federal includes USD 2.6 billion in state bonds. Another investment of approximately USD 7 billion is by public-private partnership funding. The construction is being done in an environmentally friendly way, as it has promised to recycle 100% of all usable concrete and steel. The transportation system would include trains that accommodate 1,300 passengers at once and will be up to 1,300 feet long. The technology of the trains would be based on high-speed trains from Japan, Germany, and France.
• Approximately USD 60 billion would be invested by the government to repair surface transportation nationwide. Development of the Glassboro-Camden rail line would cost approximately USD 1.6 to USD 1.8 billion and is expected to be completed in 2028. The train would stop at Glassboro, Pitman, Sewell, Mantua, Woodbury Heights, and Camden stations.
• The U.S. logistics giant Prologis has planned to develop a massive warehouse on a 50,000 sqm area at Prologis Park Wroclaw III near the airport. The warehouse is designed to be 12 meters high, and the construction is scheduled to complete by Q2 2023. Additionally, over 600,000 square meters of modern warehouses are currently under construction in Lower Silesia.
• The Portal Bridge Enhancement Project, with a total value of USD 1.65 billion, involves the construction of a 3.92 km, two-track, high-level, fixed-span railway bridge over the Hackensack River in New Jersey. Project construction commenced in 2021 and is estimated to be completed in quarter four of 2026. The project would replace the 111-year-old swing bridge, enabling marine traffic to sail underneath smoothly. The project will improve service throughout the northeast corridor and contribute to the U.S. construction equipment rental market growth.

MARKET TRENDS & DRIVERS

Investment Through the Bipartisan Infrastructure Law to Rebuild Public Infrastructure is Expected to Support the Demand for Rental Construction Equipment
The US Department of Transportation (USDOT) and Federal Highway Administration (FHWA) liquidated approximately USD 120 billion to restructure the highways and bridges for the years 2022 and 2023. In November 2022, a list of more than 2,800 bridges was released for upgradation. USDOT also stated an investment worth USD 2.2 billion in Rebuilding American Infrastructure with Sustainability and Equity (RAISE) for 166 projects to modernize local transportation with safer, more accessible roads, bridges, and rails. Under the National Electric Vehicle Infrastructure (NEVI), the Infrastructure Bill approved Electric Vehicle Infrastructure Deployment Plans for all 50 states. This investment included building EV charging stations with an investment of more than USD 7.5 billion.

Rising Inflation & Supply Restraints in the Country is Expected to Propel the Demand for Rental Machinery
In 2022, some of the biggest challenges faced by players in the U.S. construction industry were rising material prices and labor costs, staff shortages, supply chain issues, and worn-out stocks due to global uncertainties. In July 2022, the inflation rate in the country reached its high of 9.06%. Additionally, International Monetary Fund (IMF) has projected the U.S. inflation rate to rise to 8.1% in 2023.

According to the U.S. Bureau of Labour Statistics analysis, the input prices of non-residential construction increased by more than 24% in 2022. Construction costs were up by 13.2% in the months after January 2022, where construction costs of highways and streets increased by 20%, and steel mill products increased by 113%. Moreover, the supply disruptions have hampered the manufacturing of new equipment leading to a surge in the equipment price. Such factors create a lucrative opportunity for the U.S. construction equipment rental market.  

Growth in the Mining Industry to Propel the Demand for Renting Earthmoving Equipment
According to the U.S. Geological Survey, U.S. mines produced approximately USD 90.4 billion in mineral commodities in 2022, increasing by USD 9.7 billion compared to 2020. Among the non-fuel commodities, crushed stone was the leading commodity produced in 2021. The metal mine production was valued at USD 33.8 billion in 2021. This includes copper at 35%, gold at 31%, iron ore at 13%, and zinc at 7%. Additionally, in 2021 the leading ten producing states were Arizona, Nevada, Texas, California, Minnesota, Alaska, Utah, Florida, Missouri, and Michigan.

Morenci Mine is a copper mining project in Arizona, which produced approximately 69.5 Mt of ROM (run of mine) of copper in 2021. The mine is due to operate until 2044. Similarly, another coal mining project, The North Antelope Rochelle, is a greenfield mine that produced approximately 76.5 Mt of ROM in 2021. The closure date of this mine is 2047.

Integration of Advanced Technology in the Rental Fleet To Support the U.S. Goal of Net-Zero Emission by 2050
The United States government, in 2022, announced to achieve net-zero emissions by 2050 and a 65% reduction by 2030. Industries, in response to the announcement, are transitioning towards zero-emission power. For instance, United Rentals, the world's largest rental company, announced its partnership with Turner in response to reducing the environmental impact of its operations and helping customers reduce their carbon footprint. United Rental also introduced total control emissions tracking systems in the renting equipment so that the customers can evaluate the environmental footprint.

INDUSTRY RESTRAINTS

Rising Mortgage Rates to Restrict the Demand for Residential Construction
Residential construction in the country fell to its lowest in 2022 due to high mortgage rates and high prices of construction materials. In October 2022, the average interest rate was 7.06%, and the house prices reached USD 525,000, a 40% increase compared to 2020. The Federal Reserve further predicted the mortgage rates to be at 4.6% in 2023, which is comparatively higher than the pre-pandemic levels. These high rates have crushed house demand because buyers must pay more to get a mortgage on the same-priced home. Such factors have simultaneously affected the growth of the U.S. construction equipment rental market. Also, mortgage applications fell by 38%, the lowest in 25 years. Additionally, the purchase of new single-family homes fell by 10.9% in September 2022.

Warehouse Shrinkage in the U.S. is Expected to Restrict the Demand for Material Handling Rental Equipment
It has been anticipated that U.S. warehouse development will decline in 2023. Therefore, the U.S. industrial and leasing activity is set to fall by 10% to 15% during the same period. The average warehouse vacancy rate increased to 3.2% in the second quarter of 2022. Rent rates in the warehousing sectors have increased drastically, increasing labor costs. Also, the rent of warehouses near the ports has increased; for instance, the Southern California Inland Empire rent rose by 24% in 2022. The shortage of warehouses is expected to disrupt the logistics sector as well. Such factors can hamper the growth of the U.S. construction equipment rental market.

Labor Shortage in the Country is Expected to Hamper the Pace of Construction Projects
According to the US Bureau of Labor Statistics, the construction industry in the U.S. had approximately 440,000 job openings in April 2022. The investment announced through the Infrastructure Bill in 2021 requires more than 300,000 laborers each year to fulfill its goal of rebuilding infrastructure projects.

 The BIL spending is expected to start in 2023 and continue till 2033. It has been estimated that the contractor's segment would witness a shortfall of 160,000 workers, whereas the materials sector would experience a scarcity of 145,000 workers and 40,000 workers in the engineering sector. Several factors are propelling the labor shortage in the country, for instance, the increasing aging population. In March 2022, the construction industry witnessed many people quitting their jobs (248,000). Another factor is the high proportion of unskilled laborers present in the industry. The industry requires approximately 650,000 skilled laborers for the upcoming years.

VENDOR LANDSCAPE

• Prominent vendors in the U.S. construction equipment rental market are Caterpillar, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, Komatsu, John Deere, Hyundai Construction Equipment, JCB & Kobelco.
• JCB, John Deere & Terex are emerging strong in the U.S. construction equipment rental market. These companies are introducing innovative products to capture the construction equipment industry's share. For instance, in 2022, John Deere launched its new large, wheeled loaders (744 P-tier, 824 P-tier, 844 P-tier, and the 904 P-tier) in the US.
• Other prominent U.S. construction equipment rental market vendors are CNH Industrial, Liugong, Tadano & Terex.
• Liebherr, Caterpillar, Volvo Construction Equipment, Komatsu & Hitachi Construction Machinery are the U.S. construction equipment rental market leaders. These companies have a strong industry share and offer diverse products.
• Caterpillar operates over 60 locations in 25 states of the United States and is a leading US exporter. Finning CAT is one of the prime distributors in the United States.