Ritchie Bros.' Orlando Auction: A Cyclical Perspective Amid Expensive Capital Conditions

Orlando Auction Highlights Equipment Market Trends

The February auction in Orlando offered a real-time look at the current appetite for heavy equipment. Over a five-day span, Ritchie Bros. achieved more than US$265 million in gross transaction value, moving over 14,500 items to a worldwide audience of more than 19,500 participants. The majority of these assets came from the construction, transportation, and energy industries, providing early insight into buyer sentiment as the year unfolds.

The breakdown of buyers reveals a market driven largely by domestic projects. Roughly 86% of the equipment was purchased by U.S. buyers, with Floridians accounting for 39% of total sales. This strong local demand points to ongoing regional construction and infrastructure activity, rather than speculative or broad-based investment. While there was some international interest, including buyers from Vietnam and Saudi Arabia, overseas participation remained limited.

However, these results must be considered in the context of a generally soft market. The auction’s impressive scale stands out against a backdrop of declining equipment inventories and lower asking prices, reflecting a cyclical downturn. High real interest rates are making capital investments more expensive, and growth opportunities are selective. The Orlando auction doesn’t signal a market rebound, but rather confirms the current operating environment: when financing is available and projects are ready, demand persists. Still, the selective, project-focused nature of purchases and the broader market trends suggest the auction is a reflection of the cycle, not a reversal of it.

Macroeconomic Pressures: Interest Rates, Tariffs, and the Equipment Cycle

Several major macroeconomic forces are shaping the current equipment market. The main driver—engineering and construction—lost momentum heading into 2025. Both real value added and gross output fell in the second quarter, and by July, total construction spending had dropped nearly 3% compared to the previous year. This slowdown, especially in commercial and manufacturing construction, highlights the challenges facing the sector.

Central to these challenges is the high cost of borrowing. Real interest rates, which account for inflation, remain elevated and are a significant obstacle for companies considering large equipment purchases. These higher rates increase financing costs, often causing firms to delay investments. This context makes the strong, project-specific demand seen at the Orlando auction all the more notable—it’s happening despite, not because of, expensive capital.

Adding to the pressure are recent tariff increases. The effective tariff rate on construction goods has surged to a four-decade high of 25% to 30% in 2025, with new tariffs on steel and aluminum reaching as much as 50%. These measures have sharply raised material costs, pushing construction expenses to their highest levels in 40 years. As a result, companies are facing tighter margins, longer project timelines, and more frequent project cancellations. This inflationary environment is prompting many buyers to turn to used equipment as a cost-effective alternative, which could boost demand for the assets Ritchie Bros. offers.

Together, these factors define the current phase of the equipment cycle. The sector is in a trough, weighed down by high borrowing costs and expensive materials. The Orlando auction demonstrates that demand can still emerge for well-funded projects, but the overall environment remains constrained. A broader recovery will depend on whether these headwinds—especially interest rates and tariffs—begin to ease, potentially allowing growth areas like AI-driven data center construction to lift the entire market.

Ritchie Bros.: Scale, Digital Transformation, and Market Position

Ritchie Bros. is well-positioned for today’s market conditions. Its large-scale operations and multi-channel platform provide much-needed liquidity when traditional financing is tight. The company’s digital auction platforms have become the preferred method for many buyers, expanding the pool of participants globally. Features like detailed inspection reports and virtual walkarounds have increased buyer confidence, even for remote purchases. In a market where new equipment is both scarce and costly, Ritchie Bros.’ ability to quickly connect sellers with a broad, competitive audience is a significant advantage. This makes the company an essential marketplace for used equipment, which is in high demand as firms look to manage costs.

Despite these strengths, the market remains cautious about the company’s future. RB Global shares are trading near their 52-week low, down 0.77% for the year, and currently sit 13.7% below their recent high of $119.58. This valuation reflects investor uncertainty about the cyclical outlook, even as the company maintains strong transaction volumes and market share. The stock’s recent stagnation, despite solid performance in 2024 and 2025, suggests investors are waiting to see whether the downturn in construction spending will persist or begin to recover.

Looking ahead, the long-term prospects for Ritchie Bros. remain positive. The global construction equipment market is forecasted to grow at a 6.53% compound annual growth rate, reaching over $267 billion by 2032. This growth is fueled by major infrastructure projects and rapid urbanization. For Ritchie Bros., this means a steady and expanding supply of commercial assets to facilitate. The company’s role as a trusted marketplace is a structural advantage, not just a cyclical one. Its challenge is to weather the current downturn while maintaining its platform’s strength, positioning itself to capture more market share as conditions improve.

Key Drivers, Risks, and Market Signals

The continued strength of the Orlando auction depends on several forward-looking factors. One immediate catalyst is the potential for a supply shortage. Recent reports indicate significant declines in heavy equipment inventories, with some categories falling more than 10% year-over-year. If these trends continue, tighter supply could help support prices, benefiting both sellers and Ritchie Bros., whose fees are tied to transaction values. Dealers are cautiously optimistic, with some expecting a gradual recovery through 2026, partly due to these inventory dynamics.

The main risk is a broader economic slowdown or a reversal in the Federal Reserve’s current policy of lowering interest rates. Although the Fed has started to cut rates, expectations for a rapid economic rebound are low. As noted in recent analysis, rate cuts are unlikely to trigger a boom in the near term. Any pause or reversal in the Fed’s approach, or new signs of economic weakness, could quickly dampen buyer confidence and reduce transaction volumes. Since Ritchie Bros.’ business tends to lag capital spending trends, further declines in construction activity would likely be reflected in future auction results.

Another important indicator is the balance between domestic and international sales. The Orlando auction’s strong U.S. buyer presence, with 86% of assets going to U.S. buyers, highlights the regional, project-driven nature of current demand. A significant increase in international participation—beyond the current 14% from countries like Vietnam and Saudi Arabia—would suggest a more resilient, global market. For now, the domestic focus both limits and defines the current market environment.