Global Infrastructure Investments Drive Growth in Heavy Equipment Market
A strong infrastructure system is a lynchpin in global trade and economics. Although the ability to efficiently move people, materials, and products from one place to another is crucial, very little has been done to monitor how global infrastructure investments fare. This makes it difficult to predict where infrastructure investments are most critical.
In addition to tangible materials, communication infrastructure has also seen incredible growth. Being able to build fast, reliable, and safe networks and data centers for communication and the exchange of ideas are becoming just as important as loading docks and shipping channels.
In both cases, the infrastructure needs to be in place. According to Oxford Economics, global infrastructure investment needs are estimated “to be $94 trillion between 2016 and 2040. This is 19 percent higher than would be delivered under current trends and is an average of $3.7 trillion per year. To meet this investment need, the world will need to increase the proportion of GDP it dedicates to infrastructure to 3.5 percent, compared to the 3.0 percent expected under current trends.”
This growth tops earlier reports. The global outlook for construction equipment is good and is expected to get better according to a report by Allied Market Research. Their report said the market will see a compound annual growth rate of 8.9 percent from 2015 to 2020. The growth will take the market value to $240 billion by 2020.
The report forecast changes in the market beginning in 2014 and ending in 2020. It’s titled “Global Construction Equipment Market – Size, Industry Analysis, Trends, Opportunities, Growth and Forecast, 2014-2020.” Clearly, the need for global infrastructure investments has grown exponentially.
Spurring growth is global infrastructure investments (production upgrades), including residential and commercial building construction. The Asia-Pacific market is expected to account for much of the long-term growth in heavy-equipment demand as construction continues to increase in the region. North American market growth will remain moderate during the forecast period, according to the report.
Heavy equipment includes machines used for moving earth and materials. Excavators, dozers, loaders, cranes, and forklifts are expected to be in demand. Loaders and cranes in particular will be needed for large-scale construction. These machines are versatile and can be used in a wide range of building construction and mining projects.
Driving much of the global market growth are public works projects and rail construction. Oil and gas, manufacturing, and mining will also contribute substantially to the demand for equipment.
Loaders are expected to account for more than 44 percent of the 2020 market revenue. Loaders are used in construction to move earth, asphalt, and other heavy materials.
Demand for cranes will increase steadily, the report says. Cranes are used to lift and handle materials. Earth-moving and material-handling equipment comprised about 50 percent of the 2014 market value.
An increase in commercial and residential infrastructure construction and investments in infrastructure are expected to give earth movers a faster growth rate than other types of heavy equipment. Other findings of the report are:
- The Asia-Pacific construction equipment market from 2015 to 2020 will grow at a CAGR of 10.2 percent.
- During the forecast period, the material-handling equipment sector will see a 12.4 percent CAGR. This is expected to be the fastest-growing market segment.
- The mining and excavation equipment market will grow at 9.5 percent from 2015 to 2020.
Some equipment manufacturers and institutional investors have adopted strategies to take advantage of the projected growth in infrastructure construction. Manufacturers see the next few years as the right time to launch products and acquire properties and set sustainable development goals.
The report profiles several prominent equipment manufacturers that may prove to be key players in meeting the global demand for heavy equipment. Infrastructure investors will also be keeping a keen eye on the growth over the next few years.