The growth of crawler cranes market is stagnant with lagging demand from heavy lift applications. However, the market is expected to bounce back with the demand for medium capacity lift applications from the upcoming infrastructure development projects.
AGlobal Market Insight report says the Asia-Pacific crawler crane market is witnessing a high adoption in the construction and mining sectors and is expected to grow at a CAGR of over 5 per cent from 2018 to 2024. The escalating infrastructure development projects in countries including India will favour the crawler crane market growth. Rental market is a major growth driver for crawler cranes in India. However, the current market scenario is stagnant for crawler cranes due to various reasons of slowdown in rental market due to low rental rates, slowdown in wind power sector which is considered as the major user of higher capacity crawler cranes, and the popularity of tyre-mounted cranes in heavy lift projects.
What drives demand?
Crawler cranes are used in medium and heavy lifting applications. According to Siddharth Bhoir, Managing Director, Bhoir Group, major demand drivers of crawler cranes are refinery, cement plants, steel plants, power plants etc. He adds, "Wind power was a major demand puller for higher capacity crawler cranes but the segment has now slowed down which has severely impacted the bigger capacity crawler cranes. With solar power now picking up, demand for bigger capacity crawler cranes for installation of windmills has drastically come down. The wind power sector uses 600 tonne crawler crane which used to fetch a one-time rental of Rs 6-7 million a month which has now come down to as low as Rs 3-4 million a month, with up to six month employment a year. The earnings came down drastically. Also, post-tsunami that hit Japan in 2011, many nuclear plants that were planned to come up got scrapped and didn't see the daylight.'
Bhoir Group has a fleet of around 40 crawler cranes of capacities ranging from 75 tonne to 500 tonne.
Manoj Chaudhari, CEO, Shethia Erectors & Material Handlers explains, 'There is no published statistics about population of cranes. In my own personal estimate, the current market size of crawler cranes is about 1,800 units. Crawler cranes are used in almost each segment. Currently, infrastructure, wind, refinery and petrochemicals, metals and minerals are driving the demand.'
With wind power projects slowed down and no major things happening in power sector, the demand in crawler cranes has restricted to small and medium cranes. Ghananeel Molankar, Divisional Head - Construction Machinery, Liebherr India, Comments, 'We witnessed demand in smaller capacity crawler cranes ranging from 50 t to 150 t capacity. Majorly these cranes have been used as a support crane for foundation works across various projects and general lifting applications. We have seen such demand rising from metro projects as well.'
Kunal Gala, Director, JNK Lifters sees good demand for crawler cranes in the range of 35 to 250 tonne capacity. "Since various piling jobs, erection jobs and metro projects are going on, demand for lower capacity crawler crane is very high,' observes Gala.
With many big size projects coming up, is there demand for crawler cranes for heavy lift application? Molankar points out, "There are important factors which have to be considered prior to conclude which type of crane is to be used in a project - a crawler or a tyre-mounted. However, in my opinion yes, there could be a substantial role of crawler cranes especially in the smaller capacities.'
According to Chaudhari, Indian market has witnessed significant growth in crawler cranes over a period of time - in numbers as well as in capacities. He adds, 'As on today, India has cranes in multiple numbers in even heavy cranes category (600 to 1,250 t capacity). Though the size of market is large, we need to maintain restraint in limitless expansion as it would ultimately hurt the rental market only.'
According to Bhoir, currently the supply of crawler cranes is more than the demand in India. 'Crawler crane population is more than tyre-mounted cranes, whereas the scenario in the developed markets is just reverse. However, the Indian market is slowly moving towards more tyre-mounted cranes. Thus, the population of crawler cranes is expected to reduce in future. The rental rates of crawler cranes are much lower compared to tyre-mounted cranes.
Products and solutions
In India, crawler cranes of leading brands are available, mainly through rentals. Liebherr is a major crawler crane OEM that offers technologically advanced machines in different capacities. Molankar elaborates, "We at Liebherr Werk Nenzing, Austria, manufacture two types of crawler cranes: normal lifting crawler cranes (LR series) and heavy-duty cycle crawler cranes (HS series). We have some really amazing upgrades on our LR series and HS series crawler cranes. All these features will be launched at the upcoming bauma Munich 2019 exhibition in Germany. These features will further enhance safety and efficiency of the operation providing value addition to our customers."
As a machine used for lifting applications, safety and precision play major roles. Molankar says, "We at Liebherr continuously strive to fulfill all international standards so that our cranes are accepted globally with the highest levels of safety and unmatched quality. In terms of technology, we have always adopted the latest technologies that enhance our crane operations with utmost focus on safety. As a result, there are a number of features that we have added to our cranes and will be showcased at bauma Munich 2019."
Chaudhari observes the changing technology trends in crawler cranes, "More or less the crawler crane design is evolved already. Over the period of time, crawler cranes have become lighter, transport-friendly (maximum individual component weight reduced by great extent) and with a lot of electronics and computer controls. The safety features are enhanced considerably." Gala highlights, "End-users prefer hydraulic crawler cranes over mechanical cranes. But mechanical cranes are equally in demand where free fall operation is a must as they are more efficient than hydraulic crawler cranes."
Old is not bad
It has been observed that many crawler cranes currently working at certain Indian project sites are comparatively old. Safety is of utmost importance when using crawler cranes which in most cases lift medium to heavy weights at heights. How do we justify working of old machines at project sites? According to Molankar, there are many old cranes working on at different projects. "In my opinion, the overall condition of a crane needs to be evaluated. It does not necessarily mean that if a crane is old it can't be used but what matters is the way the crane has been maintained and if it satisfies the safety standards. Companies should consult with the OEMs and carry out the necessary repairs if needed so that these cranes are in good and safe working conditions. A complete thorough inspection of the crane on regular basis must be carried out as per the operating manual. A crane is lifting equipment and hence it should be ensured that all the safety and statutory norms are adhered to," he adds.
Chaudhari says the situation has already changed. He adds, "There was a time when almost all the cranes in India were old and used. In the past one decade, the scenario has changed and today most of the cranes being acquired are new cranes. With time, customers have also started putting age restriction on the cranes. One also needs to understand that crawler cranes easily have useful and safe life of 25-30 years. So when some one says the crane is old, it could be a wrongly held perception. There is a small population of crawler cranes in India which is more than 35 years old but these cranes have very specific application. If maintained properly and overhauled periodically, these cranes are still safe to operate."
Gala also reflects the same, "Older model cranes are always going to stay as they are still robust in operation if proper repair and maintenance is carried out and there are few jobs where these cranes are best suited."
Bhoir concerns on the practices prevailing in the market that adversely impacts the rental market, "Crawler cranes have long life of 25-30 years, working as per the norms with proper maintenance schedules. However, in India, crawler cranes of 15 years and more cannot be used in projects because to get the contract, one needs to use machine of up to 15 years of age as per the tender criteria. The reason is that most of these projects are being funded by international banks which mandate the use of new machines and restrict use of very old machines. In this scenario, the rental player doesn't have the option to earn more on the machine as it will take at least eight years for break-even and then he can earn only for a few years, in spite of the long life of the crane."
Rentals: essential for growth
Rentals play important role in the growth of crawler cranes market in India. Chaudhari says, "The growth of crawler cranes market is directly proportional to the rental market growth. Last year was bad for both but we do expect good potential for the rental market as well as crawler cranes market."
Gala explains, "Rental markets are the main purchasers of crawler cranes. Many Chinese manufacturers are providing cranes at very competitive prices. This has lead to increase the number of cranes in the market. Even though there is high demand, at the same time supply is also quite high and so the rental rates have not improved as they should have."
Molankar elaborates, "The crane rental market plays a significant role in the growth of crawler cranes. The rental market is witnessing difficult times as of now due to 40-50 per cent fleet being idle and rentals reduced by nearly 30-40 per cent. However, the situation is expected to improve."
In the current market scenario, rental market faces a lot of challenges ranging from low rental rates, getting finances at competitive rates compared to global players and contractors buying own cranes from OEMs with credit facility. Chaudhari points out, "The major challenge with rental market of crawler cranes is the heavy costs associated with mobilisation and demobilisation, and the conditions of customer for the rental companies to absorb these costs for a given period of rental. This is wrong practice and needs to be abolished." According to Gala, stagnant or lower rental rate is key challenge, which needs to improve keeping in mind the long term growth of the rental industry.
Bhoir elaborates on the challenges faced by rental players in India, "Currently, world leaders in heavy lift operations are present in India, having their huge fleet in India and abroad. They need not buy or hire from the local market, but just bring from their fleet in Europe or the US and once the job is done, the cranes are sent back. The rentals are not picking up since we are facing such international competition in the market. The major challenge from international competitors is that they raise finance at a very low interest rate of 2-4 per cent to buy cranes while we in India have to raise finance at much higher rates of 10-12 per cent and sometimes 14 per cent to buy cranes. This is a major setback to the Indian players. It is never going to be easy for us because European and the US markets are flooded with cranes and there is no much developments happening in developed markets. So most of these cranes are idle and they have a long life of 25-30 years. In this scenario, growth is minimal for Indian rental players. We never ever thought when rentals went down by 50 per cent the foreign players will still stay in the market. But they have comfortably stayed in the market, at the same time they are importing more machines from foreign markets for future projects."
According to Bhoir, another challenge rental players facing is that the crane manufacturers are offering credit limit to EPC contractors who buy their machines. Since there are many big projects coming up, EPC contractors are buying their own cranes, instead of hiring these cranes for contracts of 4-5 years.
Bhoir also stresses on the importance of policy support for rental players to stay competitive in the market. "In every industry, government protects the local players. In crane rental segment also the government needs to take necessary steps to protect the Indian players. When we buy a crawler crane or an all-terrain crane, the break-even period with 100 per cent employment is 6-7 years. But we cannot get 100 per cent employment in the current market scenario. So, the break-even time goes beyond eight years also."
There is a need for big projects like Reliance's Jamnagar refinery for continuous and ongoing jobs for rental players to survive in the market. Bhoir adds, "There was a time when even 2,000 cranes were working a day simultaneously for years when the Reliance's Jamnagar project work was going on. Out of these 2,000 cranes, 500 cranes were owned by Reliance while the remaining cranes were from rental players. So, we need such kind of projects simultaneously happening in the country. The project capital was of Rs one trillion. Today there may be 10 big projects going on simultaneously, but all of them put together not even come to this size. Rental players will have opportunity only if projects of the size of Reliance's Jamnagar refinery. At the same time, big players like Reliance have the capacity to buy their own cranes for the job instead of depending on rentals. Government has provided many facilities to these players, which is not there for the rental companies. If equipment rental segment is included in the infrastructure category, we can raise fund from abroad at competitive rates. The Crane Owners Association of India (COAOI) is working toward availing such facilities to rental segment. But since we are a small industry, it is very difficult for the government to consider."
While higher capacity crawler cranes market is reeling under the demand crunch due to slowing down of potential markets such as wind power and nuclear power segments, the smaller and medium capacity cranes still are in demand with the ongoing infrastructure projects in various sectors. Chaudhari explains, "Crawler cranes have always been playing a significant role in the lifting market. They will continue to play a major role in the upcoming big size projects for their special usage characteristics." Gala also sees opportunity in the market as he comments, "With many infrastructure projects going on and many in the pipeline, it is good opportunity for the rental market to raise the rental rates and also upgrade their fleet to newer machines."
In spite of the challenges in the market on various fronts, sustainable development in infrastructure and construction activities will drive the demand for crawler cranes in the market in future.