Global asset management and disposition company Ritchie Bros. has released its latest Market Trends Report, showing record demand for used transport and construction equipment and a booming agricultural sector as tractor sales continue to soar.
Used prime mover vehicles and trailer sales were up 52 per cent, second hand tractor sales were up by 157 per cent and construction equipment sales over the last year were up 10 per cent in Australia in the first half 2022.
The report indicates booming sales of excavators, dozers, dump trucks, backhoes, loaders, as well forklifts, with the number of registered bidders up by 47 per cent, buyers up by 25 per cent and more sellers in the market, up by 11 per cent.
Ritchie Bros. APAC Director, Finlay Massey, who sells industrial equipment and trucks through online auctions across Australia, said the soaring demand across every sector –including transport, construction, agriculture, energy and mining – reached unprecedented levels in 2021.
“In the first half of 2022 we have seen significant increases in the numbers of construction, transport and agriculture vehicles sold as well as bidders, buyers and sellers turning up in droves,” he said.
“Operators are turning to used assets as they are faced with 12-24 month waits on new equipment. We expect the transport industry will continue to be disrupted by significant challenges for the next 18 months, but we know the sector is buoyed by the commitment of the Australian Government through its $120 billion funding of the infrastructure investment pipeline and the Instant Asset Write-off Scheme stimulating spending.
“The significant rise in buyer demand has continued despite the negative impacts of the pandemic that have plagued the industry over the last two years. These factors have contributed to an increasing cost base for operators and record demand for used equipment.
“What we are seeing on the Ritchie Bros. auction floors is continued buoyancy despite the real economic pain being felt right now. Put simply, we have cashed-up buyers with not enough supply.”
Price escalation in the construction sector continues, as a major concern for raw material prices increasing between 10-50 per cent, with the biggest threats to the completion of infrastructure projects remain availability of workforce, raw materials and construction equipment.
The transport machinery market continues to thrive despite driver shortages, record fuel prices and air freight being back up and running.
However, some operators already struggling with costs are now faced with inflation and rising interest rates, which has exacerbated financial distress for business struggling with fixed price contracts on low margins. As a result, dispersals of complete fleets due to early retirement and business wind ups are expected to rise through 2022 and into 2023.
The report said global original equipment manufacturer (OEM) supply issues are one of the key drivers of demand for used equipment across all sectors as operators have been forced to look outside the normal supply chain for equipment solutions.
With no end in sight for the ongoing shortage of new equipment globally, demand for second hand construction, transport and agriculture equipment continues to grow, signalling continued surging capital expenditure in the industry.
However, the third wave of COVID is again disrupting the industry with staff absenteeism across already stretched supply chains.
“It’s been a tough 12 months as the industry has been impacted by fuel price hikes, steel and component price spikes, delays in the availability of raw materials as well as increasing costs to shipping as well as delays,” Massey said.
“These factors and a rising cost base for operators are causing financial distress for marginal businesses while also driving up costs for buyers. As a result, Ritchie Bros. has seen a significant increase in the number of complete dispersals, as operators choose to bring forward retirement to capitalise on high equipment prices while they can.”
While the increase in the number of insolvencies forecast in the early pandemic days has not eventuated, the Australian Taxation Office has recommended enforcement actions and it is expected insolvencies across all sectors will gradually increase to pre-COVID levels by Q1 2023.
Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content). View all posts by Ray Chan →
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