The supply of equipment is tight with lead times out weeks or months and demand at an all-time high. As the pandemic progressed in 2020, many rental companies put their fleet purchases on hold while manufacturers experienced layoffs, furloughs and complex pandemic safety restrictions. This created a global tsunami of demand fueled by the recovery, aging rental fleets, global infrastructure spending coupled with manufacturers unprepared due to diminished capacity, social distancing requirements, and their own global supply chain.
An International Construction article cited Off-Highway Research estimates that we are on track for a global construction equipment sales record in 2021. That doesn’t count unexpected complexities like the Suez Canal blockage, which alone accounts for 12 percent of all global trade. Our trusted manufacturers and associate members desperately want to meet demand, but it will take time.
While it is frustrating to deal with constrained supplies of new equipment, if you can’t find new fleet, neither can your customers. The old saying is to turn lemons into lemonade, and this lemonade could be pretty sweet for equipment rental companies. Our business revolves around the ability to manage complicated logistics, minimize downtime and utilize fleets effectively.
The following are a few of the tools rental companies can use to meet the needs of their customers despite the challenges in growing their fleet.
Uptime of the fleet is a priority. Now is not the time for just-in-time inventory of parts. Stock a few extra key parts and wear items. Spend extra time on inspections and repair any potential issues quickly. Focus staffing on service, repairs and maintenance. It’s a great time to get your sales team involved. I know from personal experience we can all wash equipment and prep equipment. You can’t rent it if it isn’t available.
Incentivize early returns. I’ve heard many sales team members tell a customer they had already reached the month rate and that it would be better to just keep the unit if they thought there might be any chance that they would need it. While that mentality is becoming less common, now is the time to offer early return discounts and make sure your customer knows about it. A small discount can go a long way and it gives you the opportunity to get that unit on another job site instead of turning a customer away. That is a win for everyone.
Plan ahead. We don’t know how long the shortages will last, and it will vary by vendor. Many small rental companies had their best year ever last year buoyed by strong DIY and small contractor business. Rental demand is unlikely to slow down soon. So, if you think you might need it, now is the time to be more aggressive in ordering it.
Be creative with fleet additions. Because you may not be able to get the volume of fleet you need, focus on acquiring fleet that is more versatile. Units that can sub in for multiple categories are more valuable when fleet is tight.
Don’t sell anything. That might be a bit of an over-exaggeration, but that was the response from most rental company owners when I posed the question of handling fleet challenges. Aaron Kosins, Lake City Rental, Warsaw, Ind., said he isn’t afraid to sell his fleet, but only after the replacement unit has arrived.
When asked how he was handling shortages, John Scott, First Source Rentals, Burlington, N.C., said it well: “Plan, plan, plan.” As rental companies, we already are great at getting creative and handling complex logistics. This year we will get an opportunity to show how strategic and planful we can be to meet customer demand.