Chart 1

Sales of construction equipment in North America

The global market for rigid and articulated haulers was hit harder than most other segments of the construction equipment industry over the last five years or so by the slump in global commodity prices.

The most recent peak in the market was in 2012, when close to 12,200 off-road dump trucks were sold around the world, with a total value of just under US$ 10 billion. Compare that to last year, when Off-Highway Research’s preliminary figures indicate that sales came in at 8,640 haulers, with a total value of US$5 billion.

With sales down 30% in unit terms but 50% in value terms over the last four years, those figures illustrate a key point, that it has been the larger, higher value machines which have seen the sharpest decline. Rigid dump trucks in other words – while articulated dump trucks (ADTs) range in payload size from around 20 to 60 tonnes, rigid hauler ranges tend to start around the 40 tonne mark, and can be as large as 400 tonnes.

In fact, sales of articulated dump trucks have held up well over the last five years, with steady annual sales of between 6,000 and 7,000 units. However, the global market for rigid dump trucks has plummeted from more than 5,500 machines per year in 2011 and 2012 to only 2,100 units in 2016.

The most significant customer group for rigid dumptrucks is mining, so with prices of metals like copper more than halving between the recent high at the end of 2010 and the low point in early 2016, it is not surprising that truck sales have collapsed so dramatically.

Such sharp price drops have a two-fold impact on the market for equipment. First, the lower selling price for a mine’s end product leaves less money available to invest in new equipment. Second, as metal prices fall – a reflection of reduced demand – production at mines is scaled-back and the more marginal facilities are closed. This means machines do fewer working hours so the equipment replacement cycle lengthens out.

In contrast to the mining-dominated market for rigid dump trucks, ADTs enjoy an appeal which includes construction as well as small and medium-scale extractive industries such as mining and quarrying. The drivers which govern demand for ADTs are therefore different (and broader), but the picture is complicated because this type of hauler also has a more selective regional appeal.

Whereas rigid dumptrucks are sold pretty much anywhere in the world where there is mining activity on a reasonable scale, ADTs are disproportionately popular in Europe and North America. These two territories account for 65% of global sales. In contrast, there is virtually no demand for ADTs in markets such as China, Japan and India, which together represented about a third of global construction equipment demand last year.

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The stability of the European equipment market and growth in North America up to 2015 have therefore been the defining factors in maintaining the overall global demand for ADTs.

Forecast

With commodity prices gently rising, rigid dump truck sales are expected to pick themselves up off the floor over the coming years. However, Off-Highway Research thinks the improvement will be modest, with sales rising to about 3,000 units per year by 2020.

In contrast, the ADT sector looks set for strong growth as the market strengthens in the key regions of Europe and North America. A key project is expected to be the new HS2 high speed rail link in the UK, the construction of which has been designed with ADTs playing the central role. At its peak, this scheme is expected to employ more than 400 such trucks, which is a significant number in the context of what is currently a 6,000 to 7,000 unit per year market.

As a result, the number of haulers sold around the world is expected to return to 2011-12 levels by about 2020. However, with a much stronger bias towards articulated machines, the value of the segment is expected to be US$7 billion, compared to the US$10 billion seen at the last peak.

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