Well into 2021, the effects of COVID-19 are still felt across Australia. Sudden and lengthy lockdowns, struggling businesses, halts on construction work, and border closures have severely impacted many industries, including capital equipment.

What was previously a sub-market within the capital equipment industry, has now grown to become a saving grace for many machinery sales businesses. According to online machinery marketplace Machines4U, there’s been a recorded 155.4 per cent increase in people looking to hire machinery and equipment compared to last financial year.

Machines4U Founder, Steve Krebs, says he was not surprised by this increase in hire demand. "We’ve seen external factors such as stock shortages, shipping delays and cash flow issues emerge as a result of the pandemic; and we've seen machinery businesses and buyers pivot. Machinery business owners are holding onto their machinery and moving to hire in order to keep their businesses running, and buyers are adapting as well.”

The Behaviour Shift Into Machinery Hire

The 2020 Machinery Frenzy 

The machinery market absolutely exploded in mid 2020: back when there was plenty of stock available to buyers and sourcing new equipment was not a problem for businesses. Machinery was readily available and buyers were taking full advantage.

This machinery frenzy, encouraged by the Federal Government’s instant tax write-off scheme, meant a lot of used equipment was snapped up. This lasted well into the latter half of 2020, until the scheme finally expired at the end of December.
 

The Ripple Effect

All this equipment buying left little-to-no stock available within industries such as construction, agriculture and metalworking. This meant buyers had to turn to brand new equipment to fulfil their requirements. This influx saw prices increase as competition for machinery continued to grow.

Fast-forward just a few months into 2021 and machinery is scarce. Shipping delays and ongoing trade tensions means new machines aren't reaching Australian shores quickly enough, with delays of 3 months or more recorded for some businesses. Demand is so high, machinery still on board container ships are being sold before they’re even reaching port. This has put more pressure on machinery sales businesses.

The Movement into Hire

To combat this unexpected bottleneck on stock, many capital equipment businesses turned to an alternative form of machinery sales: the hire market. This was reflected in the marketplace, with some industries such as construction seeing a 27.1 per cent increase in hire equipment listed on the platform.

In fact, the Machines4U platform saw almost all top 5 industries have a significant increase of hire ads added to the platform over the last financial year, with woodworking hire machinery listings increasing by 80 per cent, metalworking by 30 per cent and trucking by 11.3 per cent. There was also a rise in people looking to hire machinery, with organic traffic for hire ads increasing by 63.3 per cent, and enquiries for hire machinery increasing by 155.4 per cent, when compared to the previous financial year.

It’s clear to see a shift has occurred within the capital equipment industry, and as stock shortages continue, it’s likely more machinery sales businesses will need to turn to solutions such as hire to maintain cash flow, and their customers.