Equipment Type

Peer-To-Peer Rental Employs Idle Machines

“P2P” equipment rental is aimed at connecting construction equipment owners having underutilized machines with equipment users who have work for those machines

June 26, 2017
Peer-To-Peer Rental Employs Idle Construction Equipment

The American Rental Association (ARA) recently published figures that project a steady expansion of the U.S. equipment-rental industry for the next several years. According to ARA, equipment-rental revenue in 2017 is projected to reach $49.4 billion, up nearly 5 percent from 2016, and to touch $56 billion by 2020. The most recent figures we could find indicate that, in round numbers, 70 percent of “equipment” rental revenue is generated by heavy construction and industrial equipment, 25 percent or so by construction-related utility equipment and tools, and the remainder by rental of general household and event-related items.

The reasons for renting are diverse: supplement occasional gaps in an owned fleet; acquire specialized machines needed only infrequently; acquire machines with the latest technology for more competitive bidding; delay buying when business conditions are uncertain; comply with emissions regulations on restricted job sites; or, rent in lieu of owning as an overall strategy to preserve capital and eliminate maintenance/repair concerns. To own or to rent is a question every equipment-using operation answers based on its own set of circumstances, but, overall, rental is on the rise.

Some Peer-to-peer Rental Firms

Historically, the demand for rental equipment has been supplied by conventional rental firms, most of them large, nationwide companies. In the past several years, however, a number of enterprises have added a new dimension to equipment rental, reasoning that a machine sitting idle or underutilized in one contractor’s fleet could be rented and put to work by another contractor. The idle machine is now generating revenue for the owner, and the contractor renting the machine typically is paying a lower rate than through conventional channels—on average, 30 to 40 percent less, say those involved in the process, depending on the type of machine and perhaps seasonal demand.

Basically, that’s the idea behind the “peer-to-peer” (P2P) concept of equipment rental being developed by such operations such as Dozr, EquipmentShare, SharedEquipment.com, and Yard Club (now owned by Caterpillar).

So as not to mislead you, however, it’s probably safe to say that P2P equipment rental is not widely available, at least at this time. Of the three P2P equipment-rental business that agreed to speak with Construction Equipment, only SharedEquipment.com, an online-only enterprise, describes its scope of operation as nationwide. The other two organizations, Dozr and EquipmentShare, are operating at present in select geographical areas, but both plan to expand as they are able to establish local infrastructures for providing on-site service support and machine transport for rental customers.

“Every question voiced by a potential
new customer begins with ‘what if.’
‘What if my backhoe rolls into a pond?’ ‘What if it doesn’t come back?’”

— Kevin Forestell, CEO, Dozr

Dozr, for example, has operations in select regions across Canada and the United States—including Ontario, Alberta, New Jersey, and Florida. EquipmentShare presently is represented in Texas (Dallas, Houston, San Antonio, and soon in Austin), Missouri (Columbia), Florida (Jacksonville), and in New Zealand. The company has plans to open eight new markets in the South and Midwest during 2017.

In terms of operating strategy, SharedEquipment.com, as noted, is an online-only P2P service started about a year ago and aimed, says Al Dean, founder, at bringing together equipment owners wanting to rent or sell machines with equipment users looking for attractive rental rates and purchase prices. The mix of users, says Dean, includes contractors, equipment dealers, and rental houses. “SharedEquipment.com at present is a portal connecting the provider [machine owner] with the renter as a means to facilitate sharing equipment,” he says.

At present, rental-transaction details on Shared-Equipment.com are negotiated between the lender and renter, including the rate, insurance coverage, machine transport, payment, and resolution of machine problems on the renter’s job site. In the future, says Dean, SharedEquipment.com plans to offer umbrella insurance coverage and to establish a third-party payment system. After-transaction reviews posted online by both renters and lenders, he says, lend integrity to the process.

Lender/renter assurances

At Dozr, a P2P rental company launched in 2015, the first order of business, says Kevin Forestell, CEO, was to establish an insurance program.

“Every question voiced by a potential new customer begins with ‘what if,’” says Forestell. “‘What if my backhoe rolls into a pond?’ ‘What if it doesn’t come back?’ We felt it was of first importance to be able to assure lenders that they would not incur loss when placing their machines with renters. We worked with a major insurance carrier to develop a program uniquely suited to Dozr’s needs.”

Although lenders are required to have their machines insured, explains Forestell, the renter’s insurance is primary and Dozr’s policy secondary in the rental transaction.

“What many potential lenders don’t often realize,” says Forestell, “is that the moment they list a machine for rent, they become a mini rental company, and their fleet insurance might not cover them as such. Dozr’s policy sits on top of the renter’s insurance to fully protect the lender.”

Before potential lenders or renters can use Dozr’s services, says Forestell, both are required to establish accounts, which are verified by Dozr.

“When an owner wants to list a machine,” he says, “we talk with them about the work they do, the machine’s condition, how much downtime has been incurred, and where they’re comfortable sending it. When renters book a machine, we contact them to make sure they’re not going to use it inappropriately. Lenders and renters also rate each other, just as you’d do with other sharing-economy services, such as Uber or Airbnb. This gives extra incentive for lenders to send out clean, well-maintained machines and for renters to take good care of them.”

Dozr also gives renters assurances that they won’t be set back if a machine is damaged or breaks down, says Forestell. The company contracts with service providers in the area, including OEM dealers, to attend to problems within a four-hour window. If the machine can’t be fixed in that interval, Dozr finds a replacement.

According to Forestell, rental firms sometimes also use Dozr services, especially for specialized equipment. Rental companies, like all equipment owners, he says, are concerned about utilization and might not own infrequently rented specialized equipment. In these instances, the rental company might look to Dozr, with its wider customer base, to secure needed machines. Or, if the rental company does own specialized equipment, says Forestell, listing it with Dozr presents it to a wider audience.

In March 2017, says Dozr co-founder Tim Forestell, the company also launched a direct-sale program. If a machine is purchased via Dozr, the buyer might be eligible to earn back a guaranteed percentage of the machine’s cost, perhaps up to 60 percent, if the machine is listed for rent seasonally over a number of years. The program, he says, makes it easier for companies of all sizes to purchase equipment. In fact, he says, some of Dozr’s customers buy equipment primarily as an investment—with the intent of renting it out to generate revenue.

Optimum utilization

Although P2P rental is an important aspect of EquipmentShare’s overall business strategy, the organization’s primary focus, says co-founder Willy Schlacks, is “to use technology holistically to improve fleet management.” To that end, EquipmentShare has developed its own telematics platform, ES Track, and serves as a data aggregator for information coming from an equipment owner’s mixed fleet.

“Fleet utilization directly impacts a contractor’s return on investment,” says Schlacks, “and peer-to-peer rental is a solution for increasing utilization. But we never lead with peer-to-peer rental—that is, we never tell the contractor to immediately rent as a means of boosting utilization. Instead, we lead by asking a couple fundamental questions: ‘Do you realize that technology can assist you in better managing your fleet for optimum utilization?’ ‘Do you understand that tracking equipment data with telematics can improve maintenance efficiency and machine longevity?’

“We want to be sure that we’re driving fundamental value in the fleet owner’s operation. If an analysis of telematics data shows equipment that is not being used, then, certainly, rent it out. Our first priority, however,  is to ensure that peer-to-peer rental is a viable option to  increase utilization—not just a way to make money.”

EquipmentShare equips all machines rented out on its P2P rental platform with the ES Track telematics system, which, says Schlacks, is installed by EquipmentShare about 70 percent of the time. According to Schlacks, having machines in the ES Track system eliminates questions about machine usage, potential abuse, location, and the extent of the machine’s use. ES Track helps uncover any developing maintenance issues with the machine, he says, both prior to and during use. Also, says Schlacks, many fleets want to integrate rental machines into their overall management strategy, which ES Track data allow them to accomplish.

The company also vets propsective renters through a series of background checks, even offering its own insurance policy to supplement the machine owner’s primary insurance coverage, says Schlacks, thus “arming lenders with complete protection from loss and damage.” EquipmentShare handles machine transport between lenders and renters, and also handles on-site service for rented equipment (and also for customers who contract with the company for maintenance services).

“EquipmentShare has regional shops and mechanics on the road 14 hours a day,” says Schlacks. “Our goal is to have response times of less than two hours. We occasionally contract with outside service providers, but by and large, we’re operating our own facilities. We’re hyper-sensitive about the customer experience and want to control as much as feasible.”

Overall, says Schlacks, the EquipmentShare system has the flexibility to meet a wide range of customer needs. The company, he says, works closely on occasion with OEM dealers and some rental companies, and the rental platform also allows machine users to buy and sell equipment, which is inspected in EquipmentShare shops before being listed.

“There are always nuances to equipment ownership,” says Schlacks, “and EquipmentShare does its best to accommodate customers and to make their jobs easier by bringing data to the forefront of fleet management and operations.”

More like this

Comments on: "Peer-To-Peer Rental Employs Idle Machines"

Overlay Init