Post-Pandemic Heavy Equipment Environment
Once society begins to reopen, there will be a large backlog of work to complete, especially within the residential and commercial construction sectors. The heavy equipment demand is likely to rebound quickly to accommodate increased activity; however, we anticipate some barriers that will limit the market’s ability to quickly normalize.
Many production facilities for equipment as well as components have been shut down. Therefore, a quick rebound in demand may create an equipment shortage. While there will be immediate workload on projects that were contracted prior to the shutdown, consumer confidence may slow new project spend. This, coupled with potential equipment shortages, will leave heavy equipment users seeking alternative routes to acquire equipment. DuckerFrontier is closely monitoring a number of alternative acquisition models including ‘Uber’-type models in which equipment owners provide independent rentals as well as ‘Travelocity’-type models where a third-party matches potential renters with rental providers. Both of these models have been used on a limited basis within the heavy equipment industry. However, the post-pandemic environment will be ripe for growth within this channel. We expect the equipment rental market to absorb much of this excess demand. This method allows companies to access the equipment needed for current work without accepting the long-term risk of ownership.
Opportunities for Growth Post-Pandemic
DuckerFrontier predicts that while the market will fall short of initial projections for 2020, this resilient and adaptable market will rebound. Despite the pandemic, the market will likely show modest growth of 3 to 5% over 2019. Customer-centric and adaptable companies will experience the quickest rebound.
The post-pandemic market will look considerably different than that which existed in early January. The most effective strategy for thriving in this new environment will be to fully understand the needs of the customer-base. A detailed assessment of the customers’ journey can help to identify challenges and pitfalls that may be limiting purchases or swaying them to purchase from the competition. Those companies that are best at predicting these needs will have first-mover advantage post-pandemic.
DuckerFrontier’s Heavy Equipment team is at the forefront of key trends impacting the industry amid COVID-19 disruptions. Visit our COVID-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with an industry expert.