Market for construction equipment services in Kyiv

Today, construction special equipment, as one of the largest segments of the trade and business market in Kyiv, and throughout Ukraine, is directly dependent on many related areas of the Ukrainian economy - and to the greatest extent depends on the real estate market, namely on construction.

About 20% of the cost of objects during real estate construction is made up of the services of special construction equipment - excavators, bulldozers, truck cranes, and other mechanisms.

In the relationship between the developer and the owner of special equipment, developers dominate, prices for renting equipment are dictated by developers, and the crisis of the Kyiv real estate market in 2014 pulled down the construction equipment services market which was influenced by several negative factors at once:

• Large-scale reduction in the volume of road and construction work in Ukraine
• Significant depreciation of the hryvnia. The depreciation of the national currency provoked a multiple increase in the cost of imported equipment and its maintenance. Due to the fact that spare parts and components are purchased by official suppliers for foreign currency.
• The cost of a machine shift has not changed significantly and the profitability of the market for special equipment services has sharply decreased. The salaries of machine operators have decreased compared to other specialists in Kyiv, which in turn led to the loss of experienced operators and specialists by the owners who went to work in Poland. In 2018, this situation made hiring a competent and qualified operator for an excavator or bulldozer the number one issue for owners.
• The occupation of Crimea and part of Donetsk created a situation where the owners of special equipment transported them en masse from these areas. And it was transported to places where it was in demand - Kyiv, Kharkov, Odessa and other megacities of Ukraine. A significant amount of construction equipment was moved. This sharply increased competition, sometimes completely unfair and open dumping of prices in the market for construction equipment services, which was already in a deplorable state.

Since 2017, the real estate market in Ukraine has gone up, which has led to the activation of the market for special construction and road equipment services. Experts note a qualitative change - an increase in interest in purchasing new equipment. Leasing, which does not require large investments of money to expand the fleet of machinery, is becoming increasingly popular among businessmen.

Indirect confirmation of the revival of the special equipment market was the list of priority professions published by the Ministry of Education of Ukraine. The top 20 significant specialties included operators of construction and road equipment.

In 2018, the market for services and rental of construction equipment continued to grow slightly due to an increase in the volume of road construction work in the country. The sales volumes of new equipment by official representatives and the volumes of used equipment imported from Europe have increased.

Viber and rent

The business of special equipment services began to come to life. BUT. Just as there is a fly in the ointment at the bottom of every barrel of honey, a negative factor has appeared in this business, according to equipment owners. Oddly enough, it turned out to be the much-loved Viber.

Initially, in Viber, owners of road and construction equipment organized groups among themselves for the purpose of mutual exchange of orders, which was useful and effective. Groups were created according to areas and profiles of work. Everything worked well and was mutually beneficial. In total, in Kyiv today there are about forty groups on Viber such as Excavator Services, Special Equipment, Manipulator Rental, Tracked Transport and others.

But then the same BUT appeared. The groups included customers and dispatchers. And their direct task is to rent special equipment as cheaply as possible. Here, the owner of special equipment located in a Viber group consisting of 250 people, in order to receive 100% of the order, is simply forced to offer the customer or dispatcher the lowest price. This situation provokes outright dumping of prices and a decrease in profitability.

And if it is permissible to discuss pricing policy with the Customer, then the dispatcher is asked for his services 10-15% of the order cost, I argue with the high cost of advertising services. In fact, they earn more from an order than the operator and sometimes more than the person who owns the equipment.

As a result, as interviewed owners of fleets of the group’s own special equipment in Viber say, they did them a disservice. Profitability increased only for Special Equipment Dispatchers and particularly cash-hungry Customers.

The result is that the number of excavators, truck cranes, bulldozers and other special equipment in Kyiv is growing. The number of competent, experienced operators (thanks to Poland) is decreasing. Rental prices (thanks to Viber) are falling. Operators demand higher wages.

The online battle for the client is coming, contextual advertising budgets will begin to grow.