The current COVID-19 pandemic has negatively affected almost every industry across the United States and beyond, and equipment rental is no exception. What is the current and projected impact that it is having on the Equipment Rental Industry? Let’s take a look.
Recently, several surveys and data analysis studies have been performed to get a grasp of the effect this virus has had, and will have, on the industry. According to the latest economic models shown by IHS Markit™, the respected forecasting firm that compiles data and analysis for the ARA Rentalytics service, industry revenue is predicted to show a 16.6 percent decline in US rental revenue for 2020, and 11.3 percent decline in Canadian revenue.
While the party and event segment of the industry has been hit the hardest, the construction segment has also seen a slow in rental equipment demand. A survey of construction firms performed by the Associated General Contractors of America (AGC) found that more than half of the firms they interviewed have had projects halted, with nearly 40 percent of firms being forced to lay off employees.
On a positive note, however, the surveys of ARA members show that their businesses are reaching a state of equilibrium. Many members are indicating that while the situation may not be getting better, it is no longer getting worse. This could be attributed to several factors, one being optimism regarding recovery/stimulus funding, or it could simply mean that the coronavirus outbreak has reached maximum impact on the industry.
What does the future hold? The latest American Rental Association (ARA) forecast projects a steep drop in U.S. rental revenue in the second quarter of 2020, followed by quarter-over-quarter improvement for the third and fourth quarters of 2020. And what about after 2020? Projections show small growth in 2021, followed by more solid growth in 2022.
Overall, IHS Markit sees the current downturn not matching the Great Recession from 2008-2009. The financial levels may mimic those years, but they do not see this recession lasting as long.
Yes, COVID-19 has certainly impacted the equipment rental industry. For the construction segment of the industry, 2020 is projected to be a long year, with a significant decline in revenue. Many companies, however, are optimistic that the worst is over and equilibrium has been reached. Forward-looking companies can be positive about the future predictions, that growth and revenue increase are certain to come in the years to follow.
Sources:
Rental Pulse, “Rental industry poised for double-digit revenue decline in 2020 due to coronavirus,” April 2020
Rental Pulse, “Forty percent of construction firms surveyed report layoffs,” April 2020