When the global pandemic disrupted economies in early 2020, the equipment rental industry faced one of its most challenging periods in recent history. Construction sites shut down, capital expenditures froze, and rental houses braced for prolonged uncertainty. Yet beneath the surface of that uncertainty, alternative data sources began telling a more nuanced story. By examining proprietary data on online reservation volumes and fleet management patterns, analysts identified early signals of recovery that traditional metrics would take months to confirm. This article, drawing on research from M Science and data trends observed through late 2020, explores these encouraging indicators and what they mean for building contractors and rental businesses navigating post-disruption markets. For additional context on how the industry evolved through the recovery period, read our earlier analysis in the March 2021 Rental Industry Report Equipment Rental Market.
Understanding Alternative Data in Equipment Rental Markets
Traditional economic indicators for the equipment rental industry such as quarterly earnings reports, fleet utilization rates published by the American Rental Association (ARA Rental Industry Forecast 2022 What Equipment Rental), and government construction spending data arrive with significant lag. Alternative data sources fill this gap by offering real-time or near-real-time visibility into industry activity. M Science, a data-driven research and analytics firm, specializes in uncovering these insights through proprietary data streams that track everything from online reservation activity to used equipment listings.
What Makes Alternative Data Valuable for Contractors
For building contractors and rental businesses, alternative data provides several advantages over conventional reporting:
- Timeliness: Alternative data streams update weekly or even daily, compared to quarterly earnings reports
- Granularity: Data can be segmented by region, equipment type, or customer segment
- Predictive power: Leading indicators such as online reservations often precede official utilization figures by weeks or months
- Competitive intelligence: Proprietary data on major players such as United Rentals and Sunbelt offers a window into industry-wide trends
The Two Key Data Signals Identified by M Science
The M Science research identified two particularly encouraging trends emerging from alternative data in the equipment rental space during the second half of 2020. These signals, which we explore in depth below, centered on reservation volumes and fleet right-sizing patterns. Understanding these metrics helps contractors make informed decisions about equipment procurement, project timing, and capital allocation in uncertain markets.
Trend One: Online Reservation Volumes Signal Sustained Recovery
One of the most encouraging data points to emerge from the alternative data analysis was the steady recovery in online reservation volumes at United Rentals, the industry’s largest player. M Science tracked these volumes as a barometer for underlying fleet-on-rent activity, and the numbers told a compelling story of sequential improvement through the second half of 2020.
Q3 2020 Reservation Growth
In the third quarter of 2020, online reservation volumes at United Rentals grew 2 percent year-over-year, with activity accelerating as the quarter progressed. This represented a significant improvement from the lockdown-affected second quarter, when reservation volumes had plunged to their lowest levels in years. The sequential recovery was driven by several factors:
- Economic reopening allowed previously stalled construction projects to resume
- Contractors who had paused equipment procurement during the initial shutdown began renting again as sites reopened
- Seasonal construction activity in warmer months provided a natural boost
- Increased adoption of online ordering tools in a contact-averse environment accelerated digital transformation
September and October Acceleration
The most encouraging signals came later in the quarter. Average weekly reservations in September were up approximately 6 percent year-over-year, excluding the impact of Labor Day. By early October, that trend had strengthened to roughly 10 percent year-over-year growth. These accelerating trends provided a constructive outlook heading into 2021, even as the industry braced for potential winter slowdowns and renewed pandemic concerns.
Interpreting the Reservation Data
While the year-over-year growth in online reservations was encouraging, analysts noted an important caveat. The growth partially reflected increased adoption of digital ordering tools in the current environment. As contractors shifted away from phone calls and in-person transactions toward online platforms, the reservation data captured a larger share of total rental activity than in prior years. Nevertheless, the persistent sequential improvements since April lows were viewed as a constructive read into 2021 demand trends.
| Period | Online Reservation Change (Y/Y) | Key Context |
|---|---|---|
| Q3 2020 (Overall) | +2% | Sequential improvement from Q2 lows; activity accelerated through quarter |
| September 2020 (Avg Weekly) | +6% | Excluding Labor Day impact; reflects construction reopening momentum |
| Early October 2020 | +10% | Continued acceleration; strongest growth since pre-pandemic levels |
| April 2020 (Low Point) | Significant decline | Peak pandemic disruption; nationwide construction shutdowns |
Trend Two: Fleet Right-Sizing and Used Equipment Listings Moderate
The second encouraging trend identified in the alternative data concerned fleet management practices across the rental industry. As demand collapsed in the spring of 2020, rental houses faced a difficult choice: maintain fleet capacity and accept lower utilization rates, or downsize fleets to preserve cash flow. Most chose the latter, accelerating fleet reduction efforts through the third quarter. However, the data suggested this downsizing cycle was approaching its end, which carried positive implications for the industry’s trajectory.
Why Fleet Downsizing Matters
Fleet size is one of the most important metrics in the equipment rental industry for several reasons.
- Capital allocation: Rental houses commit significant capital to fleet acquisition. Reducing fleet size frees up cash but limits revenue potential when demand returns
- Utilization rates: Smaller fleets can achieve higher utilization rates with the same level of demand, improving profitability
- Customer confidence: Fleet expansion signals that rental companies expect future demand growth, while contraction suggests pessimism
- Equipment availability: For contractors, fleet size determines whether needed equipment is available when projects require it
The Pre-COVID Fleet Expansion Context
It is important to remember that many rental companies began 2020 with expectations of continued market growth. The previous years had seen steady expansion in construction activity, and rental fleets had grown accordingly. When the pandemic struck, rental houses found themselves with excess capacity relative to suddenly diminished demand. The fleet downsizing that followed reflected the reality of dramatically changed economic circumstances rather than any fundamental weakness in the rental business model. For a broader view of how these trends fit into the larger industry landscape, see our analysis of Equipment Rental Industry Trends Shaping Construction in 2019.
Used Equipment Listings as a Leading Indicator
M Science tracked used equipment listings at United Rentals as a proxy for fleet disposal activity. The data revealed an encouraging trend: used equipment listings in September 2020 reached their lowest level since before the COVID-19 pandemic. This suggested that fleet disposal efforts were nearing a bottom entering the fourth quarter of 2020.
When rental companies sell used equipment from their fleets, it serves two purposes. It generates cash that can be used to service debt or fund operations, and it reduces fleet size to better match current demand. However, aggressive fleet reduction also means the company will be less able to capture demand when the market recovers. The moderation in used equipment listings indicated that rental houses believed the worst of the demand contraction was behind them.
Connecting Fleet Trends to Contractor Strategy
For building contractors, the fleet right-sizing trend carries practical implications.
- Equipment availability should improve: As rental houses stabilize their fleets and begin planning for 2021 demand, contractors can expect more consistent access to the equipment they need
- Pricing may stabilize: The aggressive fleet reductions of mid-2020 created a supply-demand imbalance that pushed rental rates down. As fleets reach equilibrium, rates should stabilize
- Plan ahead for peak seasons: With fleets leaner than in 2019, contractors should reserve equipment earlier for peak construction periods to ensure availability
- Consider longer-term rental agreements: Rental houses managing leaner fleets may offer favorable terms on longer commitments that help them plan fleet allocation
Practical Implications for Building Contractors and Rental Businesses
The two encouraging trends identified through alternative data have lasting implications for how contractors and rental businesses should approach equipment strategy in post-disruption markets. Understanding these signals helps translate aggregate industry data into actionable business decisions.
Using Reservation Data for Project Planning
For contractors managing multiple projects, online reservation data serves as a leading indicator of equipment demand and availability. When reservation volumes are rising, it signals that other contractors are also ramping up activity, which can lead to equipment shortages during peak periods. Contractors who monitor these trends can adjust their procurement schedules accordingly, reserving equipment earlier during high-demand periods and negotiating better rates during slower months. Building a stronger rental business requires this kind of visibility into market conditions, as explored in our article on Equipment Rental Profiles Building a Stronger Rental Business.
Fleet Strategy Considerations for Rental Houses
For rental businesses, the data trends underscore the importance of data-driven fleet management. The rental houses that navigated the 2020 downturn most effectively were those that used data to make calibrated decisions about fleet reduction rather than cutting across the board.
Key strategic considerations include:
- Maintaining flexibility through a mix of owned and financed equipment
- Using data on equipment utilization by category to target reductions in over-supplied segments while preserving capacity in high-demand categories
- Timing used equipment sales to maximize residual value rather than selling into a distressed market
- Building digital reservation and ordering capabilities that capture the growing share of customers who prefer online transactions
The Broader Recovery Context
The encouraging trends from M Science’s alternative data must be understood in their broader context. The equipment rental industry’s recovery in late 2020 was uneven across segments and regions. Some equipment categories recovered faster than others, and geographic areas with different reopening timelines experienced different demand patterns. However, the overall trajectory was positive, and the data signals provided early confirmation that the industry was moving in the right direction.
Building a Data-Responsive Rental Strategy
The most successful rental businesses and contractors will be those that integrate real-time and near-real-time data into their decision-making processes. The traditional approach of relying solely on quarterly reports and annual forecasts leaves businesses reacting to market conditions rather than anticipating them.
Practical steps for incorporating alternative data into rental strategy include:
- Establish relationships with data providers who offer industry-specific intelligence on equipment utilization, rental rates, and fleet composition
- Track internal reservation and inquiry data as a leading indicator of demand changes in your local market
- Monitor used equipment listing volumes from major rental houses as a signal of fleet disposition trends
- Combine alternative data with traditional metrics such as ARA forecasts and construction spending reports for a more complete picture
- Build scenario planning processes that use data signals to adjust equipment procurement and allocation decisions in real time
The Role of Digital Transformation
The pandemic accelerated digital transformation across the equipment rental industry, and this shift has permanent implications. Online reservation platforms, digital fleet management tools, and data analytics capabilities are no longer optional features but essential components of a competitive rental business. Contractors who embrace these tools gain better access to equipment, more transparent pricing, and the ability to make faster procurement decisions. Rental houses that invest in digital capabilities capture a growing share of customer transactions and generate the data needed to optimize their fleet strategies.
Summary of Key Takeaways
| Data Signal | What It Measures | Key Finding | Action for Contractors |
|---|---|---|---|
| Online reservation volumes | Customer demand and rental activity | Sequential improvement since April 2020; 10% Y/Y growth by early October | Reserve equipment earlier during peak demand periods |
| Used equipment listings | Fleet disposal and right-sizing activity | September 2020 listings at lowest level since pre-COVID | Expect improved availability and stabilized pricing |
| Digital adoption rates | Shift to online rental transactions | Accelerated by pandemic; partially inflates reservation metrics | Invest in digital rental platforms and tools |
| Fleet utilization | Efficiency of existing rental capacity | Improving as fleet reductions align with recovering demand | Plan longer-term rental agreements for better terms |
The alternative data trends identified by M Science in late 2020 offered an early glimpse of the equipment rental industry’s path to recovery. Online reservation volumes pointed to sustained demand improvement, while moderating used equipment listings signaled that fleet right-sizing was approaching equilibrium. For building contractors and rental businesses alike, these signals provided actionable intelligence during a period of unprecedented uncertainty. By incorporating similar data-driven approaches into their ongoing operations, industry participants can build the visibility and responsiveness needed to navigate future market disruptions with greater confidence.