Two Ways to Confront Canadian Rental Rate Volatility
Throughout 2020, the construction industry – from manufacturer through dealer through contractor – experienced a perfect storm of disruptions. Rental rates are no exception, and Canadian rates from the beginning of the pandemic to Q3 showed a small overall increase at a time when there are typically decreases. However, not all subtypes were affected equally. I.C. Pneumatic Tire Lift Trucks (i.e., forklifts) had an interesting trendline: rates went down going into the start of the pandemic, then increased modestly by the end of June, and saw a 4% CAGR from Q3 2019 to the beginning of Q3 of this year. One theory is that the pandemic required businesses to increase their rates to compensate for some decreases in utilization of assets.
EquipmentWatch recently joined the Canadian Rental Service to assess these rental rate trends for the first half of 2020 and evaluate the effect of the pandemic. In this brief session, we discussed these trends, and the outlook for rates.
This scenario has changed in recent weeks, though: In the days since the podcast was recorded, we released our final analysis of Q3 rental rate trends. In the report, we note that rental rates for most Canadian regions inched slightly closer to the average mostly due to the increase in the currency conversion rate since last quarter. Of note, New Brunswick, Newfoundland & Labrador, Nova Scotia, Ontario, Prince Edward Island, and Quebec saw decreases in the weekly rate of -20.37%; while the Northwest Territories, Nunavut, and Yukon saw more modest Q3 declines of -9.49%.
In fact, compared to Q2 2020, the average daily, weekly, and monthly rental rates for nearly all equipment types fell. This near–unanimous decline in rental rates means that we are starting to see the slowdown in construction manifest itself in the data.
EquipmentWatch maintains a close watch on rental rates and offers guidance on rental decisions, as well as wider trends that impact stability of the industry. We offer several valuable resources to help navigate the rental landscape and empower equipment managers and contractors to make better decisions based on current and comprehensive data:
Rental Decision Point Guide: This guide addresses one of the toughest decisions that equipment managers face: when to use an owned vs. a rented asset. The resource includes an analysis of utilization to determine the correspondence between rental and ownership costs for a variety of equipment types.
Quarterly Rental Rate Report (Q3 2020): This report offers a quarterly recap of retail rental rate trends for the US and Canada, and is the only report covering retail rental rate trending and analysis for 10 of the most popular equipment subtypes, including a breakdown of regional rate variance, next quarter outlook, and valuable rental operations insights.
To help address the changing rental landscape and navigate disruptive changes, EquipmentWatch provides critical data built from comprehensive feedback from construction executives and industry sources.
To learn more about how we can help optimize data and improve decision-making with better data across your organization, reach out to us by phone at (888) 307-1713, or click below to schedule a demo:
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