Tags
Industry News

Canadian equipment rental revenue expected to reach $5.35 billion in 2018

ARA forecasts equipment rental industry to grow to nearly $60 billion by 2021

In its latest five-year forecast, the American Rental Association (ARA) expects equipment rental industry revenue to continue to grow consistently in the United States over the next five years, resulting in total revenue of $59.6 billion in 2021. According to the ARA Rental Market Monitor™ five-year forecast updated in February, total rental revenue in the U.S. is expected to grow by 4.5 percent in 2018 to reach $51.5 billion, 5.6 percent in 2019, 5 percent in 2020 and 4.4 percent in 2021. The February forecast is identical to the previous forecast released in November 2017 for 2018, with slight upticks in the expected revenue growth rates for 2019 through 2021.

In Canada, equipment rental revenue also is expected to show consistent growth, reaching $5.35 billion in 2018 with growth rates of 4.1 percent in 2019, 5 percent in 2020 and 4.7 percent in 2021 to total $6.125 billion, which is nearly identical to the November 2017 forecast.

Some of the positive expectations in the U.S. are a result of the Tax Cuts and Jobs Act taking effect in 2018.

"Our rental revenue forecast has increased somewhat in the out-years of the forecast. One significant reason for this increase is the long-term effects of the recently-passed tax cuts for both businesses and individuals," said John McClelland, ARA's vice president for government affairs and chief economist.

"Tax cuts generally provide fiscal stimulus to the economy, which can lead to more investment by businesses and higher employment. This can push wages higher, pushing up consumer spending on goods and services as well as leisure activities," McClelland said.

"All of these trends will help every segment of rental. The greatest concern we have is that of rising inflation that could result from an extremely tight labor market and rising prices for goods and services that are now part of the reflation of the global economy," he said.

"If inflation begins to move quickly to the upside, the Federal Reserve would be forced to tighten monetary policy with increases in interest rates beyond the 3.5 percent in our forecast. Currently, we believe this type of scenario would take some time to unfold, if it does at all, which is why we continue to expect increases in rental revenue throughout the forecast," McClelland said.

According to the ARA Rental Market Monitor, which features data and analysis from IHS Markit, a leading business information provider, construction/industrial equipment rental revenue in the U.S. is expected to show a 4.3 percent increase in 2018, 4.5 percent in 2019, 4 percent in 2020 and 3.4 percent in 2021 to reach $40.5 billion. General tool is expected to post increases of 4.7 percent in 2018, 5.9 percent in 2019, 7.8 percent in 2020 and 6.7 percent in 2021 to total $15.1 billion, while party and event is forecasted to show a 6.5 percent increase in 2018, 6.1 percent in 2019, 6 percent in 2020 and 5.6 percent in 2021 to reach $4 billion. "The tax cuts were widely anticipated with the election of President Trump and the structure of the cuts was largely what businesses had expected," said Scott Hazelton, managing director, IHS Markit.

"As such, economic responses to the cuts were already baked into the 2017 economic performance. IHS Markit only anticipates an additional 10 to 30 basis points of GDP [gross domestic product] growth compared to its pre-tax passage forecast for 2018-2020," Hazelton said.

"Even without the tax cuts, we anticipated rising interest rates would further slow construction market growth, and the potential for stronger inflation creates the risk of additional monetary tightening. The net effect is an equipment rental outlook close to what we had anticipated with modest enhancements to the upside," he said.

Investment in rental equipment by equipment rental companies is projected to increase by 3.1 percent in 2018, 8.8 percent in 2019, 3.2 percent in 2020 and 0.4 percent in 2021, surpassing $15 billion that year.

The share of revenue used for investment remains fairly steady at 25.9 percent in 2018, 26.6 percent in 2019, 26.2 percent in 2020 and 25.2 percent in 2021.

"A business and investment friendly climate suggests that the recovery can continue for some time yet and even accelerate modestly," Hazelton said.

"In 2019, we also expect a bump up in energy prices and an expectation of increased demand for equipment in the energy patch. That results in the expectation of a larger bump in investment in 2019, which also reflects the older fleet that will then be in use combined with expected future demand," he said.

"Once you get an 8 percent growth increase, you are at a new plateau," Hazelton said. "Absent another stimulus, you're not going to get another big bump in investment, so we expect that the investment increase will settle down again in 2020 and 2021."

ARA also released its latest ARA Rental Penetration Index, which shows penetration of construction equipment into the U.S. rental market at 53 percent in 2017, up 20 basis points versus last year after modest declines in 2015 and 2016.

The index calculates the percentage of construction equipment in use in the U.S. that is owned by rental companies.

Company Info

  • American Rental Association (ARA)

    1900 19th Street
    Moline , IL
    US , 61265-4179

    The American Rental Association, Moline, Ill., is an international trade association for owners of equipment rental businesses and the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members, which include more than 10,000 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province and more than 30 countries worldwide. Founded in 1955, ARA is the source for information, advocacy, risk management, business development tools, education and training, networking and marketplace opportunities for the equipment rental industry throughout the world.

    Read more

Latest News

Tags
Pipelines

Michels receives 10,000th Cat excavator from Victoria facility: PLM

Michels receives the 10,000th machine to be produced at Caterpillar's Victoria, Texas facility. Present at the ceremony were Tyler Sternat (Fabick Cat), Kent Podobinski (Caterpillar), Chuck Riggert (Caterpillar), Art Strother (Victoria facility manager), Doug Fabick (Fabick Cat), Mary Morris (Victoria O&D Planning), Kevin Michels, Pat Michels and Terry Gassner (MICHELS Corporation), Adam Helleberg (PLM), Roger Montalvan (Victoria supply chain manager), and Craig McArton (Fabick Cat).

PipeLine Machinery International (PLM) has announced that the 10,000th machine to be assembled and delivered by the Caterpillar Hydraulic Excavator Facility in Victoria, Texas - US. The new 336F Hydraulic Excavator went to mainline pipeline contractor Michels Corporation, and was presented in ceremony to them on May 16, 2018.

Read More

DPL Telematics AssetView tracking system offers innovative self-contained GPS solution

The DPL Telematics AssetView unit is compact and works for up to 3.5 years on three AA batteries.

DPL Telematics announced the release of the AssetView Tracking System. AssetView is an advanced solution for wireless monitoring and remote tracking of any powered or unpowered asset to improve logistics, manage inventory and curb theft. The small, portable GPS unit is completely self-contained and may be hidden on any asset, installing in seconds. 

Read More

Tags
Industry News

ExxonMobil, BASF form natural gas processing, petroleum refining development deal

ExxonMobil, BASF form natural gas processing, petroleum refining development deal

ExxonMobil Catalysts and Licensing LLC and BASF Corporation have signed an alliance agreement to jointly develop new gas treating solvents and process technologies for use in natural gas processing and petroleum refining. Under this new agreement, BASF will market and license technologies developed from this collaboration, along with FLEXSORB and OASE technologies.

Read More

Tags
Transportation

Michelin Tweel introduces airless radial tire for UTVs

Michelin Tweel Technologies, a division of Michelin North America, Inc., is introducing a new 26-inch airless radial tire with a four-bolt wheel-pattern hub designed for use on UTVs that will initially be sold as a fitment for the replacement market. Originally designed for military special operations use on light-tactical vehicles, the MICHELIN X TWEEL UTV 26x9N14 airless radial tire is a single unit that replaces the current pneumatic tire/wheel/valve assembly. Once bolted on, there is no air pressure to maintain, thus eliminating the need to carry spare tires, tools or repair kits.

Read More

Tags
Industry News
Pipelines

NETZSCH brings multiple screw pumps to GPS in Calgary

NETZSCH Canada, Inc., experts in solutions designed specifically for difficult pumping applications, will be highlighting its NOTOS Multiple Screw Pumps at the Global Petroleum Show (GPS 2018), which will be held June 12 - June 14, 2018 at the Stampede Park, in Calgary, Canada. The pumps will be featured in the NETZSCH booth, number 1394, highlighting the capability to pump everything from light fuel oil to viscous asphalt; the NOTOS Multiple Screw Pump is an excellent choice for rail car and ship loading and offloading, as well as tank-to-tank transfer. 

Read More

Tags
Transportation

Keyera to develop new Cushing terminal

Keyera to develop new Cushing terminal

Keyera Corp. has announced the development of a crude oil storage and blending terminal in Cushing, Oklahoma. The Wildhorse Terminal ("Wildhorse") will include 12 above ground tanks with 4.5 million barrels of working storage capacity. The majority of the capacity is backed by fee-for-service, take-or-pay storage arrangements ranging from two to six years in length.

Read More

Tags
Instrumentation, Systems & Automation

Pneumatic cylinders from Festo offer new variants and installation options

The latest generation of Festo's popular CRDSNU round stainless steel pneumatic cylinders boasts new variants and installation possibilities for extended and contaminant-free operations. Based on the ISO 6432 standard and ideal for operations in harsh environments or where frequent and effective cleaning is a must, CRDSNU now offers options like an extremely long-life dry running seal as well as self-adjusting end-position cushioning. 

Read More

Tags
Transportation

SMS Equipment makes big statement in support of cancer research, mental health

Messages supporting breast cancer and prostate cancer awareness, as well as mental health awareness, are part of the unique paint jobs on two Komatsu mining trucks.

SMS Equipment Inc. and KMC Mining have partnered to make big statements in support of prostate cancer research, breast cancer research and mental health awareness - unusual, bright, giant, and mobile statements, in fact, that are intended to spark candid conversations.

Read More