Forklift truck acquisition methods may be changing but apart from the obvious need to save money these changes suggest that other factors, like the uncertain economic outlook and need for more flexibility to cope with more volatile markets are also at work.
The majority of trucks supplied in the UK, around 70%, may still be supplied on some rental/lease basis but within that group significant changes have been taking place with, perhaps, the refurbished market taking off and now accounting for about half of all new trucks supplied. The attractions of this market are alluring because savings of 30-40% can be had, but buyers/hirers need to be cautious because refurbs can vary widely, from little more than a lick of paint and new tyres to a full truck strip down with all worn parts replaced with new. Procurers, therefore, need to ask just what has been done to the truck. The profile of refurbished truck users is also changing, as even ‘blue-chip’ companies now incorporate them in their fleets.
With an eye on market vicissitudes, truck procurers of all sizes are now shifting more to short-term rental, partly, as always, to cope with seasonal troughs and peaks, but also because the uncertain economic outlook would make long-term truck procurement a riskier position. That does not, of course, mean that longer-term hire based on 5-year contracts should be eschewed because all leading truck suppliers now accept that truck users do not like tying themselves down to five years when markets are more uncertain and volatile than ever and so they will be happy to include break clauses in their 5-year contracts. Possibly another trend favouring the move towards shorter term rentals is that the third party logistics (3PLs) companies, themselves big truck customers, are constrained by their clients’ contractual arrangements because many of them are short, one-year contracts.
A third trend that seems to be emerging is the rising number of mixed fleet customers across all company sizes, i.e. they are using short-term rental, outright purchase, new trucks, refurbished, and secondhand. Such a trend highlights the need to apply even more caution when examining the fine print in truck acquisition agreements, because the devil lies in the detail. Large fleet users, however, have another problem, which is trying to discern the most useful truck mix and numbers for their own, unique applications. There is, however, good news on this front because the leading forklift makers, and suppliers like Briggs, have developed useful software programs to help their potential clients to decide on the most appropriate numbers and types of trucks, and that can even include advice on the most suitable forms of racking/shelving. Even so, it makes sense for truck acquirers to have a reasonable knowledge of the different types of trucks on the market, some of which are far more productive than others, not just in terms of pallet movements per hour but also their impact on interface costs, like building rents, rates and energy bills.
If going out to tender, it is important to compare like for like in the supply contracts. It is not unusual, for example, for suppliers to structure rental profiles differently to give them a competitive edge. Recommended trucks should be comparable in specification and there should be careful scrutiny of the terms of conditions over the policy of returns. Check out the supplier’s wear and tear policy. Guidance on this can be had from the Forklift Truck Association who have produced a useful guide on what is and what is not fair wear and tear. What is the charge structure where agreed limits for truck running hours have been exceeded, and what are the exclusions, like wheels and tyres? Is there an option to change machine types without onerous financial implications if the business application were to change? If going for short-term rentals it is essential to know the age profile of the trucks to avoid compromising reliability and performance. These and many other aspects of the agreements highlight, as always, caveat emptor.
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