There are so many mixed signals on the forces that will impact the forklift industry this year that it is more than usually difficult to see where the market is going. Forklift demand is often touted as a reliable bellwether for the economy, with the industry first into a recession and the last to come out but that is not helpful to the buyers of new trucks who would prefer to know in advance when the industry is going to struggle, not after when they may have heavily committed themselves to buying/leasing/and long-term renting. So is there another bellwether which is more reliable and globally comprehensive than the forklift industry? Yes, there is, and its called the Baltic Dry Shipping (BDS) index, which when allied to other bellwethers like monitors of financial and political developments can be a signpost more worthy of homage than other bellwethers for the global economy.

chazForklift manufacturers themselves are cautiously upbeat on this year’s prospects. Clark Europe is expecting overall growth, especially in the European countries because it expects a better GDP performance than in 2015. Narrow Aisle Ltd, specialists in articulated forklifts, is also bullish, believing UK logistics will continue to grow owing to the major changes taking place in the retail sector. It also believes that the shortage of newer good quality warehouse sheds will lead to more refurbishing and reconfiguring of older warehouse stock, a trend particularly suited to articulated forklifts, which could be a defensive move should the economy weaken. One of the star performers, Combilift, continues to enjoy solid growth, having finished its best year ever in 2015 when sales reached nearly Euro150 million, “proving that in spite of a turndown in some regions, the ability to do more, safely, with fewer pieces of equipment is a major attraction for our customers,” says MD, Martin McVicar.

Big businesses, in particular, put great store in touted figures for countries’ projected GDP when considering big investment plans and they hate uncertainty. But how reliable are these GDP forecasts?

Not very, owing to their irritating habit of subsequent downgrades, which is why some countries like China and India are turning to real life indices and real world statistics. The critical point to remember about soothsayers is that they are often overly paid, unashamed practitioners of charlatanry, no matter how often their predictions are wrong, otherwise usually known as economists. Changes in sentiment can also be alarmingly swift. This grey beard recalls back in 1979 when the respected market research group, Frost & Sullivan, gave a bullish view of Europe’s materials handling industry.

Within months the European economies went over a cliff, much of Britain’s industry was decimated and never fully recovered. If ever there were a forecast more bull than bullish this was it.

So what’s different about the Baltic Dry Index? There is seemingly a disconnect between economic growth projections and the more reliable BDI pointer, which when allied to other bellwethers that monitor financial, political and economic developments, paint a cautious picture. This index tracks cargo rates for ships carrying dry bulk commodities like coal, iron-ore and grains and as such is regarded as a forward-looking indicator because about 90% of the world’s traded goods by volume is transported by sea. Investors look to this index for any signs of changes in sentiment for industrial demand. By the end of 2015 this index had plunged 95% to an alltime low, and is still plunging. It is hardly surprising that one consultancy brokerage commented that economies world wide are likely to stay weak, much to the disappointment of central banks, foreign exchange traders, miners, steel makers, trading houses and commodity economies. The parlous state of shipping, while partly due to a plethora of new ship builds outstripping scrappings, has much more to do with Chain’s slowdown and the former touted saviour of the global growth dream factory, the BRIC nations, falling into recession.

Potential MHE buyers, therefore, may find that prudence demands a rethink on their investment intentions. It may be wise, until the outlook clears, to rely on short-term hire of forklifts, or if they feel the need to buy now, then consider the second-life market, which Jungheinrich reports as running at record highs, helped by prices of 75% to 80% of their truck prices when new.

Comments are closed.

Get Warehouse & Logistics News delivered to your inbox for FREE
Join over 45k subscribers