Ensuring that the right heavy equipment is available for each job, and that every machine is used efficiently, are constant challenges for construction contractors. Whereas purchasing equipment guarantees availability and can be a sound long term investment, renting equipment requires a smaller upfront investment, and allows for greater flexibility in accessing different types of equipment as needed. But renting equipment can be costly, and selection may be limited by local availability. Increasingly, however, contractors are taking advantage of a third option for equipment procurement: peer-to-peer rental networks that allow contractors to rent equipment from other contractors, frequently at lower rates than conventional rental services offer.
Many contractors currently operate using a strategy of both renting and buying to procure the equipment they need. The reasons for renting rather than buying equipment are diverse. For example, contractors may want to fill gaps in their owned fleets, gain access to specialized machines or attachments needed only occasionally, or test out equipment with the latest technology.
Contractors may also be reluctant to deplete their capital or to take on the loan repayments, storage and maintenance expenses, and insurance and depreciation costs associated with owning equipment—especially in an uncertain business climate. But when construction activity levels are high, it can be hard to source equipment from local rental providers. Moreover, the total cost of renting can ultimately be greater than the cost of purchasing equipment.
As contractors struggle with the tradeoffs involved in buying or renting equipment, a new sharing economy model is emerging that could help to ease these tensions: peer-to-peer (P2P) marketplaces, which enable contractors to tap into the supply of equipment owned by other contractors. As well as providing contractors looking for equipment with another way to procure machines, these marketplaces can help contractors earn additional income from renting out their owned assets.
P2P equipment rental marketplaces like Dozr, EquipmentShare, and AnyQuip, have opened up new options for contractors, allowing them to easily rent the equipment they need or rent out their idle machines to other contractors using their phone or tablet. While the specific services offered by these providers vary, P2P marketplaces generally allow users to search for equipment from a wide geographic region, and use logistics partnerships to ensure rapid and affordable shipping. And because P2P networks have lower overhead costs than conventional rental businesses and the capacity to connect renters with equipment owners over longer distances, these marketplaces tend to feature a wider variety of equipment at lower prices than conventional rental yards can offer.
These marketplaces also typically provide insurance verification, background checks, and payment processing services. In addition to coordinating transactions between the parties, P2P marketplaces usually inspect the equipment before it is made available to potential renters, and employ telematics systems to track the location of rented machines and to monitor how the equipment is being used. If a machine breaks down, local maintenance services are sent out to fix the machine or to arrange a replacement.
This new approach to managing equipment can alter how contractors compete for projects by reducing their overhead costs. When using P2P networks to access equipment as needed, contractors can budget less for equipment expenditures, enabling them to lower cost estimates and compete more successfully for jobs. Meanwhile, contractors who own equipment may be able to lower their bids because they are able to continually generate revenue from assets that would otherwise be idle part of the time.
The rise of the sharing economy and other technological advances are changing how contractors are sourcing and using their equipment. As contractors face mounting competitive pressures, they can turn to P2P marketplaces to assist them in optimizing the management of their fleets, generating revenue from otherwise underutilized assets, and gaining access to high-quality equipment.