Collaborative consumption, sometimes referred to as the sharing economy or access economy, has seen tremendous growth over the past several years. The most popular forms of collaborative consumption can be found in rental accommodation services like Airbnb and ride/car sharing services such as Uber and RelayRides. Collaborative consumption has reached nearly every industry and commercial construction is no exception.
Collaborative consumption is an economic model that enables access over ownership of products and services by renting, sharing or trading them instead of purchasing them outright. The sharing economy is a similar concept with a focus on sharing, for monetary or non-monetary benefits, of idle or unused assets. The beauty of this type of transaction is that both parties can benefit. The construction industry appears to be a perfect fit for the collaborative consumption model when you look at the equipment rental market.
For example, Company A has a large fleet of construction equipment with pieces that currently aren’t being used. Company B is across town and has recently been taking on more work and finds themselves in need of a couple of extra excavators for an upcoming project. Instead of going to a traditional equipment rental firm, Company B could rent the idle excavators from Company A. Company B can get the equipment they need cheaper by renting from Company A and Company A can make some money off of equipment that would otherwise have gone unused during that time.
Last year, the American Rental Association (ARA) estimated that the share of construction equipment in the U.S. owned by rental companies was 54%. The ARA also forecasts that construction and industrial equipment rental revenue is expected to grow by 7.6% in 2015 bringing it up to about $25.6 billion for the year with similar growth expected for the next few years. Based on these figures, it’s no surprise that a number of start-ups are trying to bring the sharing economy to the construction industry. Here’s a look at a few of the companies that have popped up over the last couple of years and what they offer:
EquipmentShare facilitates peer-to-peer (P2P) rental of unused or idle construction equipment between contractors and construction firms through their secure platform. Equipment must be rated prior to being listed on the EquipmentShare Marketplace and renters are required to carry insurance for the full replacement value for any piece of equipment they rent. They guarantee the lowest prices on rentals and encourage contractors to list their available equipment at 30% below national rental firm rates. EquipmentShare handles delivery and maintenance of the equipment and it’s free to join and list equipment for rent. They even have offerings that allow contractors to buy certified used equipment. Their management platform lets you track equipment, manage jobs and schedule maintenance.
EquipmentShare was founded in 2014 in Columbia, MO. According to their website, their rental market currently is their home city, St. Louis, MO and Dallas, TX. In addition to heavy equipment, they have offerings for safety equipment such as trench boxes and scaffolding, power tools and small equipment and storage containers and jobsite trailers. There are also options for renting equipment with qualified operators including drone services for aerial imaging and jobsite mapping.
Yard Club is a San Francisco start-up founded in 2013 and has a P2P marketplace structure similar to that of EquipmentShare. All Yard Club members are vetted for their equipment operating experience and on the quality of the equipment they offer to rent. Yard Club handles the collection and payments for rental equipment and required renters to provide liability and property insurance. Pricing is set by the equipment owners and Yard Club supplies the going market rate based on demand and seasonality to assist in setting rental rates.
Yard Club has a Master Rental Agreement to protect owners and members can rate each other after each rental. Their mobile app allows members to search for and order equipment as well as being able to respond to requests and add inspection photos. Earlier this year, Caterpillar provided Yard Club with an undisclosed amount in funding and will help them expand into other markets in North America and offer more inventory to Yard Club members with their large network of CAT Rental Stores.
MuniRent is based in Ann Arbor, MI and was founded in 2014 by the same folks behind 1000 Tools, a P2P tool rental site. MuniRent is the public sector version of EquipmentShare and Yard Club. They facilitate equipment rentals between government agencies, both internally and externally. MuniRent currently offers two types of plans. Their Patriot Plan allows larger government agencies to share equipment between various departments. An example might be a state’s parks and recreation division renting an excavator from one of the state’s regional DOT offices. MuniRent’s Freedom Plan facilitates external rentals between different government agencies like neighboring cities or a county government renting state-owned equipment.
MuniRent’s membership currently consists of five municipalities in Michigan as well as the Oregon DOT. The model is similar to interlocal or intergovernmental agreements (IGA) between agencies to share services, equipment, resources and purchasing power. Typically you see these types of agreements for things like fire and police services or for buying supplies like paper. In Oregon an IGA was formed in 1996 between the City of Gresham, Multnomah and the DOT. Since that time, it has been expanded into the Managing Oregon Resources Efficiently (MORE) IGA with 61 agencies participating.
Getable started life back in 2010 as a company called Rentcycle, a rental e-commerce website where you could rent everything from heavy equipment to formalwear to sporting goods. The company has shifted its focus a few times over the past few years and rebranded the company as Getable. These days they are solely focused on serving the construction industry by being a comparison engine for renting equipment.
Getable works in a similar way to travel sites like KAYAK, Hotels.com or Expedia. Getable allows you to search suppliers nationwide for the equipment you want to rent. Once you have found the equipment you are looking for in your area, you can choose which vendor you wish to rent from based on price, location or supplier preference. Prices for daily, weekly and monthly rentals are shown for each supplier. Rentals can be placed over the phone or online through their website or mobile app. Earlier this year, Getable raised $5 million in funding, including from construction firms such as DPR and Bechtel, and has started expanding nationwide.
KWIPPED was established in 2014 and is headquartered in Wilmington, NC. KWIPPED allows you to search for equipment, and choose either the RentNOW function once you’ve found what you are looking for or request quotes from suppliers by providing information such as your location, rental period, delivery option and equipment desired. Suppliers are notified when a rental request comes in matching their profile and criteria. The company currently serves 17 industries including construction. In addition to heavy equipment, they also have offerings for welding, work zone safety, power utility, telecommunications, environmental testing and surveying.
From browsing their website, it appears that both rental companies and private owners can register as suppliers to rent out equipment. All suppliers are certified by KWIPPED and they continuously monitor and review vendors. Like most of the other companies mentioned, KWIPPED is still expanding their supplier base and offerings, but construction is a key business for them and they have plans to expand globally. Like EquipmentShare, it looks like KWIPPED allows suppliers to rent out equipment with qualified operators. I found a company that has daily and weekly drone rentals for video production that includes an operator.
The business models for these start-ups are all a little different, but they all offer two key benefits over traditional rental companies: cost and convenience. With companies like EquipmentShare and Yard Club, equipment owners are encouraged to list their equipment rental rates lower to attract more renters. With Getable and KWIPPED you can view the rates for local rental companies and then decide to go with either the cheapest or closest company. All of these companies offer convenience by taking the hassle out of locating your next piece of rental equipment. Instead of calling all over town or checking prices and availability online at a half dozen dealers, you have a one-stop location to find what you need. They also handle all the billing, payments, maintenance and paperwork involved to make it easier on the companies utilizing their services.
The biggest challenge for these companies will be building and establishing trust among its member participants. Companies renting out their equipment want to know that their equipment will be taken care of and treated properly. They also want assurances that repairs will be made in the event that their equipment is damaged. Renters want properly working equipment that is available when they need it. This is why Yard Club vets its members and has protocols in place to remove members that don’t meet their standards. EquipmentShare requires equipment be rated before being offered to rent. This type of transparency allows a level of trust to be established that will be key to the success of these start-ups.
What are your thoughts? Would you use one of these companies to find rental equipment or to rent out idle equipment for your construction business? Let us know in the comments below and be sure to check back tomorrow to find out how crowdfunding is being used in the construction industry.