Meghraj Singh, President, Aerial Platform Association of India (APAOI) and MD Rentease, discusses the demand trends in the MEWP rental segment, and the need for better understanding of safety, price regularization, and standardization in the industry.
What scope and growth potential do you see in the crane rental business with respect to economic feasibility and sustainability over the long-term?
I see immense opportunities for the growth of the rental industry in the coming years - be it for MEWPs, cranes, or any other construction equipment.
The rental industry has a direct co-relation with the country’s economic growth as the Government is giving a thrust to the development of major infrastructure and industrial projects and it plans to spend around USD 1.39 trillion (INR 75,00,000 crores) in the next 5 years. Many global companies are setting up manufacturing plants in India across sectors like automobiles, electronics, pharmaceuticals, and chemicals. These projects will increase the demand for various equipment, and the growing participation of private sector companies in infrastructure and industrial projects will give a major boost to the CE industry.
What has offset the trend for renting MEWPs and by which segment of users?
The MEWP rental market has grown exponentially in recent years given the easy availability of infrastructure equipment and the rental rates. CAPEX vs OPEX has played an important role in the growth from the users’ point of view.
Major drivers for the MEWP market growth in India are exponential growth in the infrastructure segment and increase in demand for safe working practices as awareness increases amongst MEWP users.
What is the current scenario in India’s MEWP market and what needs to improve?
The Indian market for access equipment needs a greater level of professionalism; it needs to come out from its traditional way of doing business and offer a larger number of specialized and modernized access equipment. Lack of specific safety standards is also holding the industry back. Once these are in place by the government, access equipment will grow exponentially.
Today, we are seeing a major development with the shift towards hybrid and electric equipment. The country’s powered access fleet is looking at a possible 10% rise this year from a total MEWP population of around 10,000 units. Another area of gradual change is in the age of used equipment. Companies must upgrade their fleets from 20-year-old machines to 10-year-old units.
However, the Indian MEWP market is still in the process of maturing in terms of knowledge and organized use of aerial work platforms, and there is also a wide disparity in the man:machine ratio compared to developed countries like the USA, Japan, Singapore, and European countries, which have modernized the MEWP and facilitated their optimum usage and easy availability across various industries.
What challenges is the Rental Industry facing?
The rental industry is facing issues such as lower rates being offered by smaller and unorganized players, lack of skilled operators, delayed payments, lack of security for outstanding dues from customers, lack of specific safety standards and compliances – all of which are also holding the industry back. These issues are confronting all rental companies, irrespective of their fleet or company size. It is important, therefore, for all rental companies to support each other and find solutions.
What steps are rental associations taking to deal with the issues?
Major equipment rental associations are in discussions to form an Indian Rental Alliance (IRA) which would strengthen the equipment rental industry by making it an organized sector and bring standardizatíon in the business.
With the price of machines escalating due to the hike in steel prices and the mandatory BSIV norms, mid- and small contractors are considering renting as a more viable option. What impact is this having on the rental business?
No doubt, the situation is very tricky for the rental market as regards new investments, rising prices of equipment, lockdown restrictions that have led to a demand supply gap. Not only are the increasing equipment prices hitting the contracts due to rising steel prices but there are long waiting periods of 8-10 weeks for equipment manufacturing, which blocks buyers’ advance payments, plus they have to pay the rising container and shipping costs.
However, there was an unexpected V-shape recovery post the first wave of Covid-19. The economy recovered quickly, and businesses began to return to normal in November 2020.
There was a spurt in demand for rental equipment, especially MEWPs. This was attributed to the restriction in international cargo movement in major ports during the lockdown; the non-availability of containers and shipments had curbed the supply of equipment ordered by many companies in India, which fueled demand for rental equipment.
How can OEMs support rental companies optimally?
We feel that equipment manufacturers should approach Government bodies to put safety legislations in place and implement or facilitate operator training programs. OEMs also need to stock consumables and spares for timely maintenance of their fleet, and as per their standards. They must extend all possible support to the rental industry so that it can be recognized as a ‘standard’ industry by the end-users of rental equipment.