Despite the fact that heavy construction equipment industry is growing constantly. However, there are a few issues that still create complications. Following the labor shortage issue in the industry, the second biggest hurdle is disruption of supply chain management. The issue spurred and the result of COVID-19 and still not recover from this. Apart from the epidemic, the fluctuation of the economy in various ranges further escalates disruption in used heavy equipment market issues.  

Over the past few years, the construction and heavy equipment industries have been experiencing certain supply chain instabilities. That results in severe inadequacies of new Machinery. Increases in costs of production and problems in the availability of raw materials and transportation have led to greater challenges when it comes to acquiring new equipment. These factors have shifted the buying demographics towards the used machinery market as well as the demand, cost, and access to the machines.

Rising Demand for Used Equipment

With fewer new machines coming off the manufacturing line, fleet operators and contractors have looked to use equipment to meet their needs. The resulting surge in demand has created quicker sales cycles, with equipment selling more rapidly than they ever have before. More and more companies that in the past depended on the purchase of new equipment now engage in the used market, increasing competition and pushing prices higher. 

Even used heavy equipment models with higher usage hours are getting attention, with buyers putting availability over perfect condition. Also, the contractors are more comfortable handling used equipment. They know how exactly to get the best performance from these tools. 

Price Inflation and Market Volatility

As expected, it has increased the cost of used machinery as people demand more and more. That equipment, which under normal circumstances would be fully or partly depreciated, would actually be holding value better or even gaining value. The Acquisition and Business Policy Council (ABPC)  expert and member reported high auction and online sales data as some of the machines being sold for a price closest to those brand new. 

This price increase of equipment has also posed some impacts on this industry, especially to the smaller contractors and rental companies who are likely to be derailed from their working profits by the high costs of machinery. Thus, this particular sector influences the most amongst others. Also, this can vary on the market and in specific regions since the change in administration also changes the overall result. A practical example of this is a recent change in U.S. Administrative change that impacts the construction industry along with other businesses. 

Extended Lifespan of Existing Fleets

With new equipment in short supply, most companies are trying to give their existing equipment longer lives. Fleet managers are spending more money on repairs and maintenance to get their machines out longer. It has also fueled the demand for replacement parts higher, which overburdens the supply chains even further. 

Even though it makes financial sense to keep old equipment running, the likelihood of an unforeseen mechanical failure and elevated long-term cost of maintenance does increase. On the one hand the expense of storage of the large fleet and on the other hand the overburden of keeping these machines functional. If one wants their machine to be well-functioning and perform up to the mark then those two aspects are unavoidable. 

The Role of Rental Companies

Rental firms have emerged as vital stakeholders in responding to equipment shortages. Given the scarce quantities of new purchases, numerous contractors are increasingly turning to rental to address immediate demands. The phenomenon has increased the utilization rate for rental fleets as well as earnings for rental providers. But rental houses too must cope with challenges in finding new equipment, necessitating them to keep their present stock for a longer duration, thus affecting availability to renters.

Supply Chain Improvements and Future Outlook

In this aspect, manufacturers are also striving to address the supply chain challenges, although the recovery process is relatively slow. Some manufacturers have changed their model, look for other raw materials, or redesign their process to meet the demand. As the supply chain becomes efficient in a particular period, it is forecasted that the attainment of greater availability of new equipment shall be witnessed. 

Therefore, it is uncertain how long term effects will be on the used machinery market depending on the ability of manufacturers to bounce back and the sustained high demands on used equipment.

To Sump Up

The absence of new equipment in the market has changed the dynamics of the used machinery market by demanding, escalating prices and changing the way businesses buy their machinery. Still, the situation demonstrates continuous volatility and growth due to the ability of the industry to mitigate supply chain disruptions. They do this through the fact that even in this environment, they are able to keep operations going by extending the life of their fleets, seeking to lease more of the machines, or even engaging in the used car market. 

While supply chains return to healthier conditions, the new and used equipment markets should once again achieve a better balance. In the long term, the current shortage has raised some learning points that will persist in purchasing decisions for years.