Forklift Truck Sales Rising: Is Forklift Finance The Reason?
Forklift truck sales in the UK rose by more than 8% in the third quarter of 2017 – the latest figures available – as the UK economy demonstrated its resilience across many industrial sectors.
Latest figures from the British Industrial Truck Association showed that sales of forklift trucks had reached 33,407 by the end of September 2017, continuing an upward trend that began in the final quarter of 2016. But was forklift finance the cause of the surge in these figures?
This was the third successive quarter of growth, with sales of forklift trucks to manufacturing sectors up 5.9% on the previous year’s figure, reflecting an increase in UK manufacturing output. Manufacturing remained the largest single user of industrial trucks, making up over almost a third of sales.
Retail distribution was also a major growth area, with forklift sales into that sector up 40% on last year.
BITA Secretary-General James Clark said, “Despite the continuing uncertainties around the economy and growth forecasts over the next three years, forklifts continue to be in demand, fulfilling their role as enablers of business expansion and supporters of the UK economy.”
What types of forklift trucks are popular?
Industrial counterbalance forklifts are the most common trucks used in indoor warehouses and stores, although they can also be used outdoors on stable, even surfaces. They offer straightforward operation and have dual forks at the front of the truck that lift and transport the loads.
According to BITA figures, internal combustion engine-powered counterbalance trucks made up around 30% of deliveries over the past year, marginally down on where they were at the same point last year.
Electric-powered counterbalance trucks, meanwhile, accounted for 17% of forklift truck sales last year and were important in key sectors like manufacturing and logistics.
Pedestrian warehouse trucks, increasingly electric powered, were the next most popular type of forklift and accounted for 39% of all sales in 2017. These are most popular in major forklift-using sectors of manufacturing, retail distribution and warehousing, all of which show potential for future growth depending on wider economic conditions.
What is the optimal economic life cycle of a forklift truck?
All forklift trucks have an optimal economic life cycle and replacing trucks before they become too costly to operate is one of the key aspects of effective fleet management.
In any economic downturn, there is a tendency to postpone the purchase of new equipment, but this can be a costly mistake.
When forklift truck fleets are not maintained appropriately or utilised efficiently, downtime increases and productivity is reduced. The operator then ends up spending money on a poorly maintained fleet that doesn’t perform as cost effectively as it should.
Replacing older, less efficient forklifts at the right time can reduce maintenance costs and improve productivity. Most importantly, this replacement saves money, maximises return on investment and raises profitability.
The right time to replace forklift trucks
Companies typically keep forklift trucks years longer than they should. The thinking often is that repairing existing trucks rather than replacing them costs less and, indeed, requires no capital outlay. However, this can actually result in paying more over time to maintain old trucks than new ones would have cost. There is also a hidden cost as the old forklift trucks are not as productive as new ones.
It is estimated that only 20% of the total outgoings on a forklift truck are linked to the initial purchase. The remaining 80% is attributed to ongoing maintenance, the operator and fuel costs.
Many companies focus on usable life rather than on effective economic life. Some forklift trucks may remain usable for 10 years or more, but these trucks may no longer be operating economically.
For every forklift truck, there is a limit to its economic effectiveness. For example, internal combustion-engined (ICE) trucks begin to experience higher maintenance and operating costs at about 10,000 hours of use.
However, electric forklift trucks will have a longer economic life than ICE trucks, because they have far fewer moving components.
Frequent overhauls, the replacement of major components or frequent minor repairs also combine to drive up operating costs. And failure to replace trucks at the right time can be a mistake that ends up costing the business money in downtime and maintenance costs.
Questions to consider when planning forklift replacement
In any warehouse or similar operation, a forklift truck may operate economically for a longer or shorter time, depending on a number of variable factors. These include:
- The type of truck and its age
- How rigorously it is operated
- The number of hours it operates per week, month and year
- How often it is used
- The type and frequency of maintenance it receives.
When considering replacement, it is sensible to look for signs of ageing in the truck fleet.
There are a number of things to look out for including:
- Any cracks or distortions
- Fork blades showing signs of wear
- Any exposed wires
- Fork blades distorted
- Tyres worn over the wear line
- Tyres chunking or tearing.
If any or all of the above are apparent, then the time for economic replacement has probably arrived.
What are the main forklift finance options available?
Some form of asset finance is generally the most cost-effective way of replacing an aging forklift truck fleet. There are a number of forklift truck finance solutions available but before deciding upon the most suitable equipment financing solution, it is always advisable to seek independent expert advice.
The aim of your asset finance broker will always be to provide your business with a forklift finance solution that is most cost effective in meeting your business needs. Investing in new assets like forklift trucks can be a big decision for any business, and it makes good sense to think about how best to finance your investment.
At Anglo Scottish, our team of finance specialists have years of experience as asset finance lenders to a variety of businesses. We can help your business develop, supporting you in financing new assets, or replacing old and obsolete assets that might be holding your business back.
As experts in corporate asset finance, we also pride ourselves on understanding any business sector, whether it’s manufacturing, retail distribution, logistics or many more.
Want to find out more about the forklift truck finance options available for replacing your fleet? Get in touch with Anglo Scottish Asset Finance today.