Interview: Zeppelin COO on green equipment

One of the surprising things I learn about Zeppelin Rental COO Peter Schrader when we meet at Bauma is that he is something of a Heavy Metal fan; but Schrader is also experiencing his own revelations.

COO Peter Schrader on the Zeppelin Rental stand at Bauma 2022. (Photo: KHL)

“This is the eleventh Bauma for me, but I never expected that we would have so many customers every day, at the same high levels,” he says.

We meet on the Zeppelin Rental stand on the final Friday of the trade fair – just before the weekend crowds descend.

In the background, heavy metal also takes shape in a vast, yellow-liveried showcase of Caterpillar machinery, including electric prototypes, other low emissions machines and more.

This year’s Bauma represents a new move for Zeppelin Rental’s sister company and Cat dealer Zeppelin Baumaschinen, which took responsibility for showcasing Cat construction equipment, services, and solutions at the trade fair.

Steady numbers of visitors to Zeppelin Rental’s area could in part be attributed to the joint stand, located prominently in a central interior space; but Zeppelin Rental seems to be a magnet in its own right.

Its stand, busy with visitors when IRN arrives, exhibits Zeppelin Rental’s full capability; among the features on show is the ‘Rentagon’ hosting solutions for rental including BIM enabled machine deployment, the Rental+ app, the Eco Rent program for emissions reduction and more.

Outlook for equipment rental in 2023

“We are very happy, and I’d say it has been a real success. It’s a good outlook for 2023,” Schrader says of the Bauma 2022 experience.

That optimism is offset by a note of caution on Germany and Zeppelin Rental’s other geographies - Austria, Slovakia, the Czech Republic, Sweden, and Denmark.

“Really, nobody knows what will happen next year in Germany or in Europe. This year, my thought is, after Bauma it looks ‘not so bad’. Typically, after Bauma I’d say it looks good.”

“Given the current political and economic situation, everything can change every day.”

Despite or because of headwinds from supply delays to the Ukraine conflict and inflation, Schrader believes rental remains relevant.

“We have the equipment; we have the ability to help our customers in terms of reducing their emissions and helping with efficiencies. But it’s not just about providing equipment; it is about service through things like the Rental+ app, and the Eco Rent program.”

That program, now 10 years old, has proven successful in the rental of green equipment and “solutions for our customers on lowering emissions” a key focus for the company.

The cost of low-emission equipment

Zeppelin Rental is now supplying BIM based planning solutions. (Photo: Zeppelin)

It has also entailed a learning curve. “What we learned is that it’s not so easy to push low emissions machinery. Low emissions equipment is more expensive, it’s more price intensive,” he tells IRN.

The Zeppelin stand has several Cat electric prototypes on display, and Schrader confirms that overall, Zeppelin Rental is investing “more and more” in electric and alternative power products; “Our capex next year will be more on electric and on other alternative drives than last year.”

But he also acknowledges challenges. “That equipment is two or three times more expensive for us to purchase and it’s hard not to reflect that in rental rates.

We have a big challenge to convince the market - the end customers, the contractors, the tier one construction companies – that electric and alternative drives are the way to go.”

Zeppelin Rental, Zeppelin Baumaschinen and Caterpillar’s joint Bauma 2022 showcase. (Photo; Zeppelin)

In addition to electric, Zeppelin is looking at machines with internal combustion engines that comply with Stage V, hybrid technology and even new technologies such as green hydrogen.

Outside Germany, in “progressive” markets like the Netherlands and Scandinavia, governments are enshrining low emissions in regulations, in some cases supporting those strictures with subsidies to encourage uptake, he says.

“In Germany we don’t have that. It’s limited to certain projects, for example a hospital in the centre of a city, or tunnelling projects.”

Zeppelin Rental’s approach is to proactively work with customers and suppliers on key projects. “We are market leaders and want to move forward and we want to offer that to customers.”

“It’s not a must and its more expensive, and it’s a question of the project, the tender, the profitability and what they are able to pay for rental, but we encourage it where we can.”

Power supply for electric equipment

Customers’ caution should be taken seriously, he says. “There are risks due to energy supply - concerns about electricity and infrastructure.

“The customer might have it in mind to change the project to an electric solution, but can they rely permanently on a supplier?”

To meet this need, products that support power supply, providing charging infrastructure and battery storage are a growing product line for Zeppelin Rental.

“It’s not the biggest part of the business but it’s a part,” Schrader tells IRN; and he adds that alternative power requirements are creating new customer channels.

Visitors experience digital tools at Bauma 2022. (Photo: Zeppelin)

“At Bauma I have been speaking, for example, to a city mayor who is looking for solutions for power cuts. We have some solutions to handle such things and we can speak to new types of customers, mayors, or municipalities. We’re also seeing demand from distribution centres from online retailers and local DIY centres.”

The events industry also demands alternative power options – and it’s a growing sector for other product types, he says.

“I love events – it was one of my projects some years ago to start the events business. I was convinced from beginning we had a chance to capture some of that market.

“A few years ago, we entered that business, with power solutions and lighting towers. Then the pandemic came, and we lost business for a couple of years – we were down to zero.

“This year there has been an explosion in demand; the same levels and higher than what we had before.”

“We have had discussions here at Bauma with agencies to potentially have us as key supplier, for music events and heavy metal festivals. I’m a little bit of a heavy metal fan.

“We’re becoming more and more known in events from music, to film, sports – bicycle races, that sort of thing. Events are about five per cent of our business – it is small but growing.”

Cautious outlook for construction equipment

For Zeppelin Rental’s core construction equipment business, the outlook remains positive, albeit shaded with caution.

“Before the war in Ukraine, Schrader tells IRN the outlook was optimistic; “now that’s more uncertain.”

At the same time, “In Germany we need reconstruction for highway bridges, fibreglass cable laying, gas projects and more, also housing although that is declining a little because of financial challenges, with interest rates going up.

“On the other hand, demand for 400,000 dwellings across Germany so there’s a need.”

Beyond Germany, Zeppelin Rental’s key markets including Austria, Czech, Slovakia, Denmark and Sweden are performing well.

“In those countries, it will take time to grow a business similar to what we have in Germany,” he tells IRN. To accelerate growth across all markets, the company is looking at acquisition opportunities.

“There are certain qualities we would look for, for example independent management, local market knowledge. We certainly see acquisitions as a big chance to grow the business.”

He says there are no immediate acquisition plans, but it’s on the company’s radar.

In the nearer term, despite his enthusiasm for Bauma, Schrader is bracing himself for the weekend, typically an opportunity for families and children to visit Bauma.

“Some have predicted that tomorrow and Sunday there will be fewer people here, but at the moment I can’t believe that.”