Focused on efficiency, speed and meeting the needs of today’s omni-channel distribution environment, companies continue to rely on lift trucks as a primary mode of product transport throughout their warehouses and DCs. The results of Modern’s annual “Lift Truck Acquisition & Usage Study,” conducted by Peerless Research Group (PRG), show that the industry as a whole was a mixed bag in 2015, although this year companies seem intent to increase their numbers of forklifts either through buying or leasing (or in some cases, a bit of both).
What are they using?
For the survey, PRG fielded responses from 185 readers, 82% of whom are personally involved in the evaluation, selection and/or procurement of lift trucks for their facilities. The highest percentage of them (66%) are using electric-powered ride vehicles, with 58% relying on electric-power pallet trucks (including walkies, riders, low and high lift, and reach types of vehicles), while 49% are using electric-powered narrow-aisle trucks (order pickers, side-loaders, turret trucks, stackers and reach trucks). Other types of forklifts in use include IC-powered counterbalanced lift trucks with cushion or pneumatic tires, and electric-powered and IC-powered rider-type tow tractors.
In total, most readers (29%) are using between three and nine forklifts in their facilities, while 18% use 15 to 24 vehicles and 16% rely on 10 to 14 forklifts in their warehouses and DCs. According to the survey, 69% of respondents expect to buy or lease lift trucks within the next 12 to 24 months and 32% do not expect to invest in this equipment. Of those companies that do plan to buy new lift trucks in the next 24 months, 52% will purchase two to four vehicles, 17% will buy between five and nine forklifts, and 11% expect to buy just one.
In reviewing historical survey data dating back to 2013, Judd Aschenbrand, PRG’s director of research, says the average lift truck fleet size decreased from 25 to a current 22. The median fleet size is nine vehicles. Interestingly, the number of lift trucks that readers plan to buy in the next 24 months increased slightly from 6.3 to 7 trucks.
And a higher percentage of companies are looking to buy trucks over the next 12 months. In 2013 just 58% planned to buy trucks during that time frame. That number increased to 70% the following year, fell to 63% last year, and is now back up to 68%. “That could be tied into some type of buying cycle,” Aschenbrand points out.
Exploring buying habits
In 2016, the largest majority of readers (47%) expect to shell out less than $50,000 for lift trucks. And, 22% will spend $50,000 to $99,999; 19% will invest $100,000 to $249,999; and 8% will spend $250,000 to $499,999. In most cases (69%), companies purchase their lift trucks outright. Another 14% lease their trucks and 17% of readers use a combination of buying and leasing. Of those readers who purchase their lift trucks, most do so for financial/accounting purposes (46%), better return on investment (30%) and lower cost (29%).
Companies’ lift truck disposal processes have also shifted over the last year, with more companies now turning to their dealers to take the old equipment away and replace it with new vehicles. In 2015, 24% of respondents were doing this. In 2016, that number rose to 37%. For purchased lift trucks, respondents use a variety of rotation and/or disposal methods: 43% resell the vehicles, 37% give them back to the dealers when the new lift trucks are delivered, 28% hold onto them just in case they may need them in the future, and 24% use them for parts.
Asked why they lease their lift trucks, 48% respondents enjoy the flexibility that the option provides, another 48% like the lower maintenance costs and the fact that service is included in the lease, and 24% like the option for cash flow reasons and/or the fact that it allows them to use current technology. For 57% of companies, the economy and market factors have little or no impact on how they acquire lift trucks. In fact, 22% say such factors impact their decisions “to some extent” and 21% say the economy and market influences lift truck acquisitions “to a great extent.”
When purchasing lift trucks, most companies (86%) buy direct from dealers while 21% prefer to work directly with manufacturers. For the survey, readers were also asked about the likelihood of vendor evaluation prior to vehicle acquisition. And, 37% of readers say they’re “somewhat likely” to evaluate vendors while 33% are “very likely” to take this step. For the acquisition process, 49% of companies use an approved or “short list” of vendors while 51% don’t have such list. Of those companies that do use a short list, just 20% had to remove a vendor from that list during the last two years.
Brand loyalty hasn’t changed much over the last few years, although the number of companies that are “highly likely to evaluate new brands” has increased slightly. About 41% of readers say they’re either somewhat, very or extremely likely to evaluate new brands. “In many product marketplaces, companies tend to stick with what they have unless there’s something that’s not fitting the bill,” Aschenbrand says. “This is could be an early indication of that in the forklift arena.”
When it comes to lift truck replacement, many readers (28%) say they replace their vehicles after 10 years (or more) of ownership. Another 27% say replacements usually take place within the first eight years of ownership and 16% say they replace their lift trucks in 10 years or less.
Looking out over the next 12 months, readers say they’re most likely to purchase or replace wheels and tires (73%); batteries and battery accessories (59%); tune-up parts (48%); and chemicals, lubricants, and oil (38%). To handle maintenance on their trucks, 51% outsource the work to a lift truck dealer, 27% take care of it themselves with their own in-house staff, and 20% outsource to a maintenance or service contractor. To train their lift truck operators, 80% of companies use internal training programs while 16% rely on their dealers and 10% use their independent service providers.
To manage their fleets, 41% of readers have already adopted (or expect to adopt) technology that will help them with the task, but 59% say they have no such plans. When asked about their fleet management software, 51% say the implementation was “somewhat successful,” 30% say it was “very successful,” and 16% say it was either “not at all successful” or “not very successful.”
Of those companies that track their lift truck fleets, 75% keep an eye on maintenance history, 74% watch maintenance costs, 70% look at safety (including accidents, injuries, etc.), and 61% pay attention to level of utilization.
Looking at past years’ results, the percentage of companies that have adopted technology to help manage their fleets has stayed relatively steady. During this process, companies are generally tracking the same key points that they always have, says Aschenbrand, although maintenance, safety and age are not being tracked as much now as they have been in years past.
In comparing anticipated lift truck replacement schedules across the last five years, Aschenbrand says it looks like companies are “replacing lift trucks less frequently and hanging onto their vehicles a little longer.” And, more companies are buying versus leasing their trucks, according to this latest survey. In fact, the number of companies opting to buy has slowly been trending upward since 2014—from 59% to a current 69% of firms indicating their preference of buying over leasing. In addition, 46% of readers say this is strictly a financial decision (versus the 39% that answered that way last year).
“Apparently, it’s less costly to purchase outright and hang onto the lift trucks a little longer,” Aschenbrand says. “When you look at the overall results and compare them over time, there are some definite financial drivers behind the activity that we’re seeing.”