Construction Equipment Spotlight: Crane Market & Collateral Subtypes

January 2025
At Hilco, we advise on and value a wide range of equipment categories in the construction industry. Contractors and rental companies are constantly adapting fleets to best serve the demands and trends of the industry on a regional and national level. The ever-increasing technological advancements and new construction of equipment require operators to be strategic in their approach to ownership. Construction equipment is generally well-suited as a source of equity and collateral for future lending. In this upcoming series, we will expand on specific equipment categories within the construction industry, industry trends, and Hilco’s approach to valuation.
The construction industry is multifaceted and powered by a slew of subsectors. To understand the general health of the construction industry, it is helpful to track construction starts in three major categories: residential, commercial, and nonbuilding. The Dodge Construction Network’s indices and reports are cautiously optimistic for 2025. “Construction starts have yet to see the impact of falling interest rates,” said Richard Branch chief economist of Dodge Construction Network. “Several more rate cuts will be needed to start moving construction projects through the planning process to start. Clarity, though, has improved now that the election is in the rearview mirror; however, developers may wait until the full scope of President-elect Trump’s legislative agenda comes into better focus.” A key takeaway in understanding construction spending and construction equipment demand is the variability in sector expansion and contraction. There is an ebb and flow across many sectors that creates stabilization. The construction industry of today has faced the hard lessons of past recessionary markets. Operators are becoming increasingly nimble and creative with their scope, fleet equipment, and financing solutions.
Overview
Cranes are a vital part of the construction and industrial machinery sectors, which are crucial in lifting and moving heavy materials and equipment. The crane industry is under constant pressure to innovate and adapt to the ever-evolving need for operational efficiency, specifically in large-scale infrastructure projects. Original Equipment Manufacturers maintain a close working relationship with key operators to ensure product offerings meet the latest engineering, safety and regulatory considerations facing the industry. The global crane market size was estimated at USD 35.58 billion in 2023 and is anticipated to grow at a CAGR of 4.8% from 2024 to 2030.( https://www.grandviewresearch.com/industry-analysis/crane-market-report ) The industry is driven by growth in construction (residential and commercial), oil drilling/gas extraction, renewable energy(turbines on and offshore), iron ore mining, and the Bipartisan Infrastructure Law.
Several categories of cranes serve the above verticals, with the most popular being mobile cranes. Mobile cranes are incredibly versatile and capable of lifting heavy loads in varying terrains and applications. The four types of mobile cranes are All Terrain, Crawler, Rough Terrain, and truck-mounted crane. Capacities of mobile cranes range from 5 to 3,000+ tons. Considering this wide range of capacity, it’s safe to infer an alignment between cost and capacity. Crawler cranes on the high end of that range can fetch more than $30,000,000. With proper maintenance and certification, mobile cranes boast a lengthy useful life and are capable of being utilized in the global crane market for 20+ years.
Tower cranes or fixed cranes are most common in residential and commercial construction. These cranes are assembled on-site and often in place through all stages of construction. Tower cranes are designed to lift building materials efficiently in multi-story construction. The key difference between tower and mobile cranes (besides mobility) are power options. Tower cranes are largely operated by single or three-phase power (diesel is a less common option). Safety is paramount in all crane applications but none more so than tower/fixed applications. Tower cranes must be able to withstand extreme wind and weather without the ability to be easily disassembled. For these reasons, complex environmental engineering is required to construct the foundation where the tower crane will be erected. Safety concerns, the static nature, and the closeness to the cyclicality of the residential and commercial construction industry can complicate recovery. For these reasons, tower cranes are a less common, more complicated collateral.
Marine cranes represent the third largest share of the crane categories of the construction industry. This category is a bit broad in application but mostly defined by cranes operating marine adjacent. These cranes can be truck or vessel-mounted, placed on a barge, cargo-related, or energy project-specific (offshore turbine, rig). Like tower cranes, marine cranes are an absolute necessity and crucial to the application served, and they are often of high value. Like tower cranes, marine cranes can be complicated collateral. Recovery can be challenged by the inhibited useful life due to the corrosive nature of the marine environment. Furthermore, both marine and tower cranes operate in a more permanent setting, complicating the exit strategy in the event of a default.
For this conversation, we will focus on mobile cranes. Mobile cranes are frequently considered as collateral. While mobile cranes are largely remarketable and in demand, careful consideration is required to understand the application, configuration and condition of each crane in question. If a more detailed conversation is helpful on tower and marine cranes please reach out.
Every job needs a crane
Mobile cranes have a storied past in the lending community and have incidentally established a reputation of abundant risk. At Hilco, we would insert a big grain of salt into that sentiment. The mobile crane industry has become increasingly versatile and adopted new technologies to ease operation and increase safety. Mobile crane manufacturers have worked closely with key operators to improve their product offerings to best suit the modern construction industry. All Terrain cranes and crawler cranes are on the leading edge, with new models featuring increased mobility and capacity released annually. There is very healthy competition between longstanding and upstart manufacturers. All are working to solve the equation of demand, price point, capacity, mobility, and safety. Innovation comes at a cost, something operators and lenders are well aware of. Crane ownership has become increasingly complicated in the post-covid market. Reeling from supply chain issues, labor constraints, and increased material costs, original equipment manufacturers increased new pricing YOY starting in 2020. It wasn’t until 2024 that OEMs largely yielded price increases and moved towards more normal inventory levels and a stable backlog. All the while, US consumers faced pocketed challenges in the construction industry, most notably those impacted by increased borrowing costs to prospective homeowners, which affected the new housing market. The high-rate environment spurred a blip in demand; coupled with an election year, many operators chose to defer significant purchasing decisions or opt for rental. Over the past five years, the construction industry has been subjected to economic shifts and market instability. In many ways, it is a detriment to companies that served a specific vertical or didn’t adapt to new technologies in a changing market. A tool for many contractors to offset uncertainty came in the form of rental. Rental is a compelling resource for contractors to manage cash flow and avoid the burden of maintenance, depreciation, and transportation costs. Furthermore, solving the skilled labor shortage and the need to employ a costly crane operator.
In most cases, mobile cranes represent a small portion of a contractor’s fleet. Crane rental companies have been quick to pick up on the market shift towards rental. Rental fleets are thriving, providing a turnkey service offering late-model, purpose spec’d cranes, transportation, operator and support equipment. Safety is a recurring theme and paramount when discussing crane operation. Insurers are aware of the risk. Insurability and the expense of adequately insuring is arguably the most significant challenge facing the crane rental industry. That said, reducing the liability of the lessee is another facet of the value proposition for rental.
The most successful rental fleets offer a wide variety of crane types and/or capacities to circumvent market shifts. A portfolio approach to rentals: short and long term, oil/gas and renewable, residential/commercial and infrastructure construction, etc. And most importantly, the leverage to acquire new equipment to maintain the average age of fleet.
Crane ownership can be a good investment for a contractor and even better for a rental company. The demand for cranes tends to circumvent the cyclical nature of the construction industry. Mobile cranes hold their value well, especially if maintained properly.
Support equipment and rigging should also be considered when deciding to rent or purchase. To best utilize a crane a wide range of support equipment is needed. Including but not limited to truck/trailer, counterweight, boom, rigging, mats etc. Individually and combined the cost to properly support a crane can be extensive and should be factored into total purchase price. Crane moves can be incredibly costly especially to those outside of the industry.
The below graphic tracks revenue and annual change from 2011-2029 in the Crane Rental Services in the US. It is important to consider the cost structure of the crane rental industry and the impact on revenue. After experiencing record highs during the pandemic, the industry is moving towards a phase of stabilization. This stabilization is likely attributed to uncertainty in the construction markets and the balance between commercial/residential construction and infrastructure spending. The implementation of new technologies, from maintenance tracking to customer-facing online platforms, has helped operators to better track and predict expenses while flattening the lumpy nature of the construction industry.
Secondary Market
Presently the market for quality used cranes is strong, not only driven by market demand but more so the cost of new. Think a rising tide lifts all boats. The used market has started to show more listings as OEMs service backlog. Even with increased listings it’s a seller’s market as long as time is on their side.
Visibility to transactions in the secondary market is largely unavailable to the public. Crane operators rely on a tight-knit network of dealer brokers to transact in the global crane market. A network that seemingly works to control and monitor demand, ensuring value preservation. Lengthy listing periods are a norm and often bode well for sellers as large-scale projects are constantly bid and won by ill-equipped operators. This is especially true for high-capacity, late-model cranes.
In the rare event late model cranes are found in public auction, the outcome is closely tied to the operator’s reputation and time to market. To find a significant volume of cranes in an auction, it would likely be a single-owner retirement sale. An event that would bring significant attention from competitors, dealers, and the industry at large and values inline with market expectation. Without proper documentation or history, it can be risky to purchase cranes at auction. Buyers should exercise caution when purchasing cranes at auction. A reason why comparable crane sales at auction are often dismissed is Hilco’s market approach to valuing cranes. In the event a liquidation of a crane operator is imminent, the strategy must be carefully considered. A competent partner is paramount to assist in controlling recovery and managing the cost of sale.
Approach to valuation
Hilco’s valuation practice has had a long-term relationship with the crane industry. In addition to the regular crane-related appraisal projects, we maintain relationships with OEMs and industry thought leaders to ensure a truly market-driven approach to value. A holistic approach is crucial to accurately understanding and valuing fleet that specializes in heavy lifting.