Access 101
How Uncertain Futures May Impact Fleet Planning
Expert Q&A - Oct 20
How might fleet planning look different this year?
I expect rental companies to be very cautious with their spending this year. There are a lot of question marks in the economy because the pandemic is not going away any time soon. Rental activity varies by region and type of equipment, but overall industry utilization dropped 10 to 20 percent in the second quarter with some improvement over the summer but very uncertain expectations for the fourth quarter and into 2021. For the most part, I expect most rental companies to be cautious and uncertain about adding a lot of fleet when so many construction areas look very uncertain.
Everything from housing to office construction to multi-family construction is likely to be flat at best. Petrochemical work, shutdowns, transportation industries, overall industrial markets all look uncertain. Whenever there is a downturn, rental companies must watch the balance sheet carefully and unless they know they have specific jobs, will be very cautious about fleet spending, except where replacement spending is needed, or if they have specific jobs going forward. While I do expect a tendency towards caution in expenditures, some rental companies like to get more aggressive in such times, hoping to grab market share while it’s in flux. So, a degree of expansion will likely continue, but caution will be the bigger tendency.
What areas do you predict rental companies will invest in as we move forward with the “new normal”?
For the most part, the oil and gas business is slow right now, so rental companies will tend to steer their fleet spending in different directions. There will be more interest by general rental companies in the homeowner/small craftsman-type of customer who seem to be doing pretty good business. It may be coincidental that Lowe’s is attempting to launch a national rental presence, but home improvement work is strong.
People are home more and are more likely to want to invest in their homes if they can afford it. Office construction is likely to be weak as companies are more likely to be closing offices than opening them. Larger rental companies are doing good business with specialty rental. It’s a strong market for pumps and home generators.
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