These days, the global industry is seeing an increase in demand for rental services. According to the Construction Equipment Rental Association (CERA), demand for rental services is anticipated to increase over the predicted period in developing and most populous economies like China and India. The new regional and local businesses are anticipated to make their mark on the rental service industry and generate significant earnings from their local clientele. To increase their earnings, large construction companies focus mostly on the following industries: general infrastructure, oil and gas, utility and electrical, as well as commercial and residential building.
In addition, as governmental projects indicate a larger preference for the rental use of equipment, the expansion of the construction equipment rental industry would be gradually steady as infrastructure programmes in developing countries received better budgetary allocations. Additionally, working with rental businesses is safer, more comfortable, and more cost-effective for governments than owning their fleet of construction equipment.
The COVID-19 pandemic has taken a heavy toll on the world economy, with the International Monetary Fund (IMF) predicting that the global economy contracted by 3.9% on average between 2019 and 2020, making it the worst downturn since the Great Depression. Despite estimates that the world economy will be in full recovery by 2021, recovery has been unequal, and inequalities in vaccine coverage and access may put much of the world's progress in jeopardy.
The economic impact of the COVID-19 pandemic is mostly due to a drop in demand, which means that fewer people are ready to buy the commodities and services that are available in the global economy. This dynamic was readily visible in businesses that were highly impacted, such as travel and tourism. Countries have imposed travel restrictions to slow the spread of the virus, and many people have been unable to book flights for vacations or business trips. Airlines lost expected revenue due to the decrease in customer demand, and as a result, they had to cut costs by lowering the number of flights they performed.
Due to the COVID-19 global pandemic, the building and construction sector is one of the worst hit. The global COVID-19 pandemic has halted all economic activity. The COVID-19 pandemic severely affected up to 60% of the European construction equipment industry, according to the committee for European construction equipment (CECE). The original equipment makers are most affected (OEMs). According to the Association General Contractors of America (AGC), the COVID-19 epidemic has an impact on almost USD 160 billion worth of U.S. building projects.
The construction site closures, whether partial or whole, have had an impact on the equipment rental market. Additionally, major players have made the decision to temporarily halt their production operations globally in the first quarter of 2020. For instance, Hitachi Construction Machinery Co. Ltd. announced in April 2020 that in April and May 2020, the company's four Japanese facilities would gradually modify how medium- and large-sized excavators, hydraulic components, and medium-wheeled loaders are produced, assembled, and painted. However, as they fall within the category of companies that supply everyday necessities, forklift trucks—a type of material handling equipment—are in demand by the retail, food, and packaging sectors.
The COVID-19 epidemic, as well as the resulting travel restrictions and lockdowns, has disrupted the supply chains of a number of markets including heavy construction equipment market. However, in the second half of the year, players changed their operations in reaction to the pandemic, reducing the pandemic's influence on the market.
Impact On Distribution/Logistics
Distribution/logistics are an integral part of supply chains, both within and across international borders, logistics firms help in facilitating trade & commerce, thereby allowing manufacturers to get their products to consumers. The distribution/logistics firms involved in transportation, storage and flow of products, have been badly affected owing to the COVID-19 pandemic.
