By Bethany Chambers – For ConstructionPros.com
Rental businesses are increasingly finding their margins squeezed due to supply chain disruption and increased labor costs, while demand continues to grow. Here are the key categories to examine – and how propane can improve your total cost of ownership.
The equipment rental industry has gone through nearly four years of upheaval but held steadfastly to expansion. With a 6 percent annual growth rate projected through 2030, that’s “surprising resilience in an economy that is not that strong,” according to analysts.
That growth has been hard-earned, says Josh Nickell, vice president, equipment segment, at the American Rental Association (ARA). With more than 50% of equipment now rented, not owned, ARA’s 5,700 member companies, many of which are small multigenerational family businesses with less than 5 locations, have had to scramble to address big picture (and big cost) issues.
The industry meets this month for The ARA Show, a staple of rental companies since 1956, and it’s sure to include conversations around new technology like alternative fuels. From this springboard, rental businesses will be planning for success in 2024. And that includes taking a good hard look at total cost of ownership, and which pieces of equipment offer the best overall value from beginning to end of life.
“The unique thing about rental equipment, rather than the contractor owning it, is people don’t take as good care of it. One way to solve that is to go with a simplified fuel system, like propane. It’s a closed fueling system without any corrosion or breakdown of fuel when stored, which is great for rental companies,” says Jim Bunsey, senior manager of safety and compliance for Propane Education & Research Council (PERC). Key Factors in Total Cost of Ownership
It’s hard to directly calculate wear/tear or equipment abuse by renters, but there are plenty of things you can calculate. Certainly, standardized metrics like dollar and time utilization are something “we can all agree on,” Nickell says, but some portions of the total cost of ownership should be up there, too. Here’s where Nickell and Bunsey recommend you start.