Commercial Equipment Rental and Leasing
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 8,500 companies in the US rent or lease commercial or industrial equipment and machinery directly to businesses. Major categories for rental or leasing revenue include miscellaneous types of commercial or industrial equipment (manufacturing, medical, audio/visual, theatrical and motion picture, modular/mobile buildings, energy/power generating); construction, mining, and forestry equipment; transportation equipment; and office equipment. Firms may also sell new or used equipment, supplies, and parts.
Capital-Intensive Operations
The commercial equipment rental and leasing industry is capital-intensive, and firms typically have significant investment in fleet holdings.
Variable Equipment Market Value
Fluctuations in market value for rental or leased equipment affect a firm’s fleet management effectiveness because companies rely on the sale of used equipment as a source of revenue.
Industry size & Structure
The average commercial equipment rental company operates out of a single location, employs 23 workers, and generates nearly $10 million in annual revenue.
- The commercial equipment and machinery rental industry consists of about 8,500 firms that employ 193,000 workers and generate $82 billion annually.
- The construction, mining, and forestry sector accounts for about 37% of firms and 50% of industry revenue. The miscellaneous (manufacturing, medical, audio/visual, theatrical and motion picture, modular/mobile buildings, energy/power generating) sector accounts for 58% of firms and 46% of revenue. The office machinery and equipment sector accounts for 5% of firms and 4% of revenue.
- The industry is concentrated; the top 50 companies account for about 55% of industry revenue.
- Large companies include Aercap Group (commercial aircraft), United Rentals, and GATX. Large firms may have international operations.
Industry Forecast
Commercial Equipment Rental and Leasing Industry Growth
Recent Developments
Oct 3, 2024 - US Construction Spending Drops
- The total value of US construction put in place fell 0.1% in August 2024 compared to the prior month, according to the US Census Bureau. Residential spending declined 0.3% and nonresidential spending increased 0.1%. Nonresidential spending was mostly supported by public infrastructure projects. Conservation and development spending increased by 2.2% in August, while highway and street projects saw a 0.9% increase in spending. In the nonresidential buildings segment, growth was led by communication, which grew 1.3%. Amusement and recreation spending increased 0.9%, and lodging spending rose 0.8%. Spending on public safety projects grew by 0.6%, and healthcare spending rose by 0.1%. Construction spending for office, manufacturing, and transportation each rose 0.1%. Commercial spending fell 0.5% in August, while educational and office spending fell 0.2% and 0.1%, respectively.
- On October 1, 2024, thousands of US dockworkers at ports stretching from Texas to Maine went on strike for higher wages, according to The Wall Street Journal. Workers represented by the International Longshoreman’s Association (ILA) seek a 77% wage increase over six years. The ILA rejected an offer by the United States Maritime Alliance with a 50% wage increase over six years and improved benefits. Shipping industry observers say the port shutdowns will reduce imports used in construction, including construction materials and heavy machinery. Equity analysts at JP Morgan estimate the port strike could cost the US economy between $3.8 billion and $4.5 billion per day. A prolonged strike could reduce demand for transportation equipment rentals and stall equipment rental firms’ imports of new machinery.
- According to a recent report by the US Department of Transportation (DOT), only 40% of the $550 billion in new spending funded through 2021’s Infrastructure Investment and Jobs Act (IIJA) has been announced, suggesting a lag in progress. The funds provided through the IIJA will be available until they are spent, so the funding could go beyond the law’s five-year scope. However, securing IIJA funding is cumbersome, as it flows from more than 400 programs through federal, state, and local entities. Analysis of White House data by CNBC suggests the bulk of IIJA funding has gone to road and bridge projects, followed by rail, broadband, power, and water projects. According to the DOT report, IIJA funding announced so far has gone for 10,200 bridge projects, 1,000 airport projects, 500 port, and waterway projects, 170 rail projects, and 11,200 public transit projects.
- On a not-seasonally-adjusted basis, US manufacturers’ shipments of durable goods, a demand driver for commercial equipment rental and leasing, increased 9.2% in August 2024 from the previous month and were up 0.1% compared to August 2023. Unadjusted new orders for durable goods, a signal of future commercial equipment rental and leasing demand, increased 7.5% in August from July but fell 0.5% from August 2023 levels.
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