IC crane Rental Confidence Survey 2009

03 March 2009

The annual IC Rental Confidence Survey has been designed to provide a clear and comprehensive picture of the global crane market over the last 12 months and to point where it is heading in 2009. IC reports.

Looking back over the rental confidence surveys carried out in recent years, the trend was, very much, one of increasing confidence and significant fleet expansion. The sudden decline in the world economy, however, has cast uncertainty across the industry. It manifests itself in this year's survey but, having said that, there are some positive signs.

Many companies are planning to keep their fleets as they are, rather than reducing them. In the 2007 survey about 40% of companies across the world were set to expand through 2008. In this latest survey, that expectation has reduced to 18 to 27% in the wheeled mobile crane segment. But some 54% of companies now plan to keep the number of cranes in their fleet unchanged in 2009, with just 3 to 4% of rental outfits reducing their operation.

On a regional level, rental rates are expected to fall across the board. Last year's figures show most companies were not planning a reduction. This year up to 44% and 32% of companies in North America and Europe, respectively, are planning to squeeze their rates. Comments from the continents, unsurprisingly, suggest a slowdown in 2009. "Business has just started to slow down significantly for the 45 to 90 US ton cranes, but is picking up for the 5 to 25 ton cranes. We are hopeful that will signify an upward trend," was a comment from one US company. "Canada is slowing with the market conditions and a drop in commodities and the construction industry," added another company.

Late payments

According to one European company, demand for 25 to 50 tonne mobiles is down 60%. "In the next 12 months we expect a decrease in jobs and an increase of late payments from our customers."

On a more positive note, up to 20% of mobile crane providers are looking to increase their rates, depending on the capacity.

In other western regions, Australia and New Zealand are being hit in similar ways to Europe and the US. "Everything is on hold with the world credit monetary problems. Projects are being delayed or reduced. Many players may have to sell off or reduce some of their fleets, or even completely fold up operations. It is anyone's guess which way the market and industry will fall and slow down."

Some companies are more positive and forecast a better second half to the year, indicating that the market is now unpredictable.

This view is shared in the Asia Pacific region. "The cost of cranes is going up but the rental rates are remaining the same and some are going down. We cannot guess the future," said one company in the region. Applications for bigger capacity machines, however, still seem to be plentiful and the promise of centrally-funded infrastructure work in late 2009, as in many other parts of the world, is offering relief for many crane owners. One South Korean company is looking forward to the multi-billion US dollar government-funded Korean New Deal project to connect the Han River to the Nakdong River.

"There is demand for higher capacity crawler cranes from 400 to 600 tonnes for power projects, ceiling girders, steel and cement plants, and for wind turbine erection, with more boom reach. Additional demand for cranes below 150 tonnes is going to reduce by 10 to 20%," added another company.

Encouraging expansion

Utilisation rates are also showing a downward trend. Last year, expectations were high with hardly any companies expecting a fall in usage. That has reversed somewhat in the 2008 survey. The zeros, which featured heavily in the number of companies forecasting a ‘more than 10% fall' category last year, have been replaced with some significant figures this year.

Positively, the number of companies hoping to hold utilisation rates at 2008 levels is, in many cases, higher than last year, especially in the 50 tonne mobile crane capacity. This includes the Middle East, Africa and, notably, Central and South America. Companies taking part in the latter region are forecasting a relatively comfortable year.

Returning to fleet expansion forecasts, the figures are very encouraging in nearly all regions. Companies that took part in South Asia are a little more cautious. "There is a major slowdown in the Indian crane rental market because of the economic slowdown, as well as over capacity in a lot of new rental companies," according to one company there. This does not reflect, however, the figures in other regions. In Europe, 25% of companies are planning to expand, as are 16% in North America and up to 50% and 57% in Central and South America and Africa, respectively. "There is major growth in South Africa with a shortage of cranes from 100 to 300 tonnes capacity," said one African company. "Currently, the market is good. With the 2010 soccer [football] World Cup, a lot of investment is happening, privately and from the government," added another.

Summing up the views held by many in the rental sector was a participant from Australia. "Global uncertainty means the Australian market, which has had a major boom for five years or more, may find life more difficult. Added to price rises from a weak Australian dollar investment will be difficult. Currently the market remains buoyant but the medium term is very uncertain."

To see the full story, including all the survey result tables, see International Cranes and Specialized Transport magazine January 2009 issue.

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