01 April 2008
Each year, the crane rental market becomes more diverse and, judging by the results of the latest confidence survey, 2008 will be no exception. Although the rental market remains strong and continues to grow, there are now some concerns creeping into the minds of crane users who see the world crane shortage as a serious threat. Others wonder where rental companies will be left when the bubble finally bursts.
Worldwide, fleet expansion plans for mobile cranes over the coming 12 months are broadly similar to last year's forecast. The figures show that around 40% of companies will increase their fleets. One notable difference, however, is the forecast for investment in 150 tonne capacity crawler cranes, which has doubled to 40%.
On a regional level, African companies are indicating major expansion, particularly in their mobile crane fleets. Comments from the continent suggest this is partly thanks to preparation work for the 2010 football World Cup in South Africa. In contrast, there are some concerns for the future. “Crane rental is very good in South Africa at the moment but when a downturn occurs there will definitely be an abundance of cranes in this country,” said one survey respondent.
These views are shared in other world regions, for example, in Europe. “We are at a peak, [at] this time [there] are not enough cranes. But after a few months [there will be] many cranes without work,” explained a European crane user.
Crane rental is very good in South Africa at the moment but when a downturn occurs there will definitely be an abundance of cranes in this country.
With many European countries bracing themselves for an economic downturn, this could suggest some crane rental companies will curb their investment plans in the relatively near future. On the other hand, newer European Union (EU) nations offer a different outlook. About the Czech Republic, which joined the EU in 2004, one survey respondent commented, “The construction market is healthy and follows a strong growth pattern. There is no indication the peak has been reached. Similar development is expected soon in other eastern and southern markets.”
Rental rates are forecast to increase worldwide in 2008, especially in the mobile crane sector. Emerging economies are sharing that vision, with between 75 and 98% of central and South American companies proposing rate hikes across the board for mobile and crawler cranes.
According to one Brazilian company, the market there is “booming and it will increase in the next two years.” A view shared by nearly all other South American companies taking part in the survey.
In Europe and North America, a majority of companies – between 40 and 50% – are forecasting rate increases in mobile cranes. The figures, however, show the same proportion of companies planning to keep their rates the same as 2007.
Words of warning come from one European company, which says the rental market is expanding faster than the economy of the country. “However, new cranes are entering the market and these companies are pulling the rates down, without considering the costs, future low jobs and investments. This will affect the market badly in two years' time.”
Setting the tone for the US market was a respondent from a relatively small crane rental firm. “The housing market has collapsed, so the only work now is commercial and, with the cost of fuel increasing, even that market is slowing. Times are tough for the small independent operators.” Another says, “I expect the rates to go up in correlation with the gas prices.” A third crane owner from the US warns that rental rates “must go up in tandem with purchase prices, especially here in America.”
The survey figures for utilisation rates in the rental sector correspond with other sections in the survey. The consensus is that they will rise or remain constant. Only North America shows obvious falls in this area. For 50 tonne capacity mobile cranes 22% of companies forecast utilisation rates to drop by up to 10%, while 11% of companies expect a similar drop in the 150 tonne segment and 6% forecast a fall in the 150 tonne market. In the European region, eight, 11 and 9% of companies forecast utilisation rates to drop in the 50, 100 and 150 tonne capacity segments, respectively.
Where utilisation rates are listed as staying the same, it is because of the market being so strong that practically 100% utilisation has been reached in large fleet situations. Lack of availability is a huge issue for our entire market
In line with North America and Europe, a high proportion of companies in Australia and New Zealand calculate that their utilisation rates will remain constant in 2008. “Where utilisation rates are listed as staying the same, it is because of the market being so strong that practically 100% utilisation has been reached in large fleet situations. Lack of availability is a huge issue for our entire market,” a survey respondent explained.
Substantial increases in mobile crane utilisation rates can be seen in emerging economies, including Africa, central and South America, the Middle East and South Asia. In comparison, the crawler crane sector is seeing a drift towards higher utilisation globally. North American companies are, however, an exception, with a strong showing in the ‘stay the same' category.
Scoring highly in the utilisation growth rates above 10% category, is South Asia. The region forecasts increased work rates across the board for mobile and crawler cranes in 2008. An Indonesian company sums up the feelings of many others around the world. “There is a shortage of cranes of any capacity, particularly below 100 tonne capacity – the price for second hand cranes has gone up more than 50%. A good condition ten-year-old crane can be sold for the price it had been bought for.”