The future of our industry may be much brighter than we think, because rental is an essential part of the green recovery.
It is good to reflect on the sanitary crisis and the impact it has on the equipment rental industry in Europe. More important however is it to look ahead and prepare for the phase after -COVID-19. Clearly, the situation has not been equal in all the regions and differs from one rental company to another. If we consider the main markets in Europe, we can divide them in 4 major geographical areas, for their consistent patterns regarding both the sanitary crisis and the construction and rental markets: Northern Europe (Nordic countries), Western Central Europe (Germany, the Netherlands, Austria, Switzerland), Southern Europe (including France, Spain & Italy) and the UK. We see a fall back of market size and investments throughout all markets with the UK hit hardest.
At the pick of the sanitary crisis, in April, the equipment rental activity in Southern Europe had an unbelievable decrease in revenues between 60%-85%. Also the Northern and Central Europe rental companies were hit hard and lost between 20%-60% revenue in April. The COVID-19 crisis has also meant difficulties with customer contracts, the maintenance and security of equipment, and worsening payment terms, among other things. The outlook for the construction sector is uncertain, with very few new projects being launched, and the events industry has been brought to a halt.
This unprecedented crisis has also had a positive impact on several trends. It doesn’t mean that new trends have emerged due to the crisis but that the crisis has accelerated the adoption of trends such as digitalisation and ‘home working’.
Looking at the future of the rental industry it will be very much related to the construction industry. The most important question is how much the construction market will recover over the next 12 to 18 months.
However, the future of our industry may be much brighter than we think, because rental is an essential part of the green recovery.
In December 2019, the EU set out its plans to become the world’s first climate neutral continent by 2050 in the European Green Deal. Starting with the ‘Climate Law’, which will make net-zero carbon emissions by 2050 a legally binding target and will be directly transposed into national law in every EU Member State, the Green Deal will provide an ambitious policy framework for the next five years and will be the basis for continued climate action in the decades ahead.
Despite the challenging circumstances of the COVID-19 crisis, the pressing issue of climate change remains, and the twin challenges of economic recession and the green transition are likely to define the business and policy environments in the years to come. Moreover, ‘essential’ Green Deal policies such as the circular economy and the building ‘renovation wave’ are reported to be more ambitious as a result of the downturn. For the construction sector, this will still mean extensive decarbonisation in order to meet the ambitious targets of the Green Deal.
This sustainable ‘green’ recovery indicates a bright future for the equipment rental industry as renting is often the best option from both an economic and environmental perspective.
It is well known that hiring construction equipment has an economic benefit. It reduces large investments and maintenance costs. But also provides more flexibility and reduces risks. Construction companies who already out-sourced equipment had very little burden of owning fleet during the lock-down. After each recession, we see a growing number of rented vs owned fleet. The recent study of the ERA on the Carbon Footprint of Construction Equipment also shows that renting construction equipment can also provide significant environmental benefits. It helps reduce the carbon footprint of construction equipment. Rental can bring significant reductions in emissions up to 50%.
In light of the present and future economic and environmental challenges, equipment rental is ideally placed to provide construction equipment stakeholders with the solutions they require to emerge from the current crisis and adapt to the requirements of decarbonisation and the green transition.