Rightsizing your forklift fleet in uncertain times
Demand volatility linked to the Covid-19 pandemic is severely testing warehouse operations. But there are ways to adjust your forklift fleet to deal with those ups and downs.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
Since February, the Covid-19 pandemic has caused unprecedented growth in demand for medical supplies, groceries, household goods, and e-commerce fulfillment and delivery, leaving some companies struggling to keep up with demand. Other businesses saw demand suddenly plummet, leading to layoffs, bankruptcies, and temporary or permanent closures.
This volatility has had a profound impact on warehouse and distribution center operations, including forklift fleets. “Some customers couldn’t get enough forklifts because their throughput tripled, while for others, demand nosedived and they had trucks sitting idle,” says Bill Byrd, senior manager of national accounts for Toyota Material Handling. “That threw a complete monkey wrench into their planning.”
Lift truck fleets generally remain fairly static year over year, so many were not prepared for a sudden change in circumstances. According to manufacturers and dealers, though, there are steps forklift fleet managers can take to not only respond to their current situation, but also to prepare for volatility they may confront in the future. The following are some of their suggestions.
Make more use of rentals. When demand went haywire, interest in forklift rentals shot up, mostly from fleets that needed to quickly add operators and trucks to handle increased volume. But interest has also come from those in the opposite predicament. “More people are looking at renting instead of buying or leasing because they don’t know what the next five years [will bring],” says Tom Duck, vice president and general manager of Clark forklift dealer Tri-Lift NC Inc. “They’re asking, how can I have flexibility so I can still afford to replace equipment when I need to, even if my business doesn’t hold where it’s at?
When considering rentals, says Dan Zinn, director of sales for Crown Equipment Corp., start by looking at what he calls the “core fleet.” “Even taking into account the ups and downs of seasonality ... what is the core business you can always count on? Use leasing to build the fleet to that need and meet fluctuating needs by supplementing with short- or long-term rentals,” he advises.
Having an appropriate balance of leasing and rentals will help to protect against unwanted costs if there’s another economic downturn, says Craig Brubaker, senior vice president of operations at Alta Equipment, a dealer of Hyster equipment and services. Leased equipment is locked in for the full term (usually three to five years), and there are steep penalties for returning trucks early. Long-term rentals have lower cancellation penalties and may offer more flexibility with respect to returns, while short-term rentals usually have no penalties. If business volumes are volatile, a mix of 60% fair-market–value leases supplemented with 20% long-term rentals (one to five years) and 20% short-term rentals (from one day to a few months) may be advantageous, he suggests. The level of volatility and/or the desired degree of flexibility will ultimately drive the ratio and mix of options, he adds.
Forklift dealers can offer their customers more rental options and flexibility than third parties can, Duck says. In addition to short-term rentals, his company, for example, offers terms of two to three years, with a lower rate and minimal penalties for turning in equipment early. The dealer also offers five-year rentals that are similar in length to a lease but come with discounted rates and allow for downsizing a fleet without penalties.
Take a fresh look at leasing options. Authorized dealers may be willing to negotiate flexible leasing arrangements with established customers, says Matt Stein, sales and iWarehouse manager at Arbor Material Handling, an authorized Raymond sales and service center. An example of this type of customer-specific program is a usage-based arrangement he characterizes as “a hybrid between a lease and a rental.” The program, which has gained popularity in the past few years, combines some long-term commitments with the flexibility to reallocate equipment if the vehicles meet certain criteria.
Brubaker, the Hyster dealer, mentions three additional lease types that offer flexibility. A “budget lease” allows fleets to take delivery of new equipment now and defer payments until 2021. “Power by the hour” leases charge customers based on actual equipment usage, rather than on projected use. He also points to Hyster’s Freedom Advantage lease, which is structured as two multiyear terms and permits the customer to end the lease after the first, longer term if business circumstances change.
Leasing equipment from an authorized dealer together with a fleet management system allows the vendor to utilize data to analyze operations and determine whether a different type of lease would make financial sense, says Tina Goodwin, director of fleet management for Yale Materials Handling Corp. For example, because Yale’s optional Fleet Optics program tracks and monitors users’ utilization and maintenance, “we can point out when [fleets] are over- or underutilizing the equipment” and suggest extending or shortening the lease in response, she says. “We can help customers save money by determining, for instance, that the optimal life of a lease may be three years instead of five years, because we can see that there will be more expenses in years four and five than expected because of changed circumstances.”
Use technology to optimize fleet deployment. In times of uncertainty, a fleet management program that includes telematics is a valuable tool. Fleet technology “helps customers see what they were not able to see before,” Arbor Material Handling’s Stein says. Because they measure utilization and how and when forklifts are being used, managers can make data-based decisions to reallocate equipment, either inside the current facility to balance utilization or to another facility where there’s a shortage. Since the pandemic began, “more customers have been looking for that kind of information, ... and we’re seeing increased demand for telematics systems,” he says.
Goodwin notes that during the pandemic, forklifts at some businesses have seen unusually heavy use as operators strive to keep up with unexpectedly high demand. Fleet management technology can help users save money by alerting them when trucks are likely to exceed the maximum weekly hours allowed under their lease; managers can then rotate equipment to even out usage and avoid being charged overtime, she says.
Pay extra attention to maintenance. Facilities that have experienced a spike in volume, especially those that are essential businesses, need to keep their trucks running as many hours as possible and, thus, are laser-focused on preventive maintenance and reactive repairs. Those that have experienced a downturn in business, meanwhile, are carefully watching their maintenance costs, says Yale’s Goodwin. She’s seeing more interest from the latter in flexible “time and material” programs, where customers pay for reactive repairs when required and have periodic maintenance done only when needed based on actual utilization, rather than on a more traditional fixed maintenance schedule.
Byrd says there’s a silver lining for fleets that find themselves with idle equipment because of the pandemic: Now is a good time to conduct a comprehensive review of the state of your fleet and to carry out both planned maintenance and preventive repairs. That way, equipment will be in optimal shape when business starts to recover. (Don’t forget to include power sources and related equipment, such as batteries and chargers, in your maintenance review, he adds.)
Limit specialized and customized equipment. The more specialized lift trucks in your fleet, the less flexibility you’ll have to meet unexpected demand with equipment that’s already on hand. For that reason, Crown’s Zinn recommends limiting the number of specialized assets that serve a single purpose and see little or irregular use. “When possible, try to configure equipment to handle multiple tasks and maybe make minor adjustments for special uses—for example, by using attachments,” he says. Choosing a slightly higher-capacity truck than you might otherwise specify can provide the flexibility to handle heavier loads than usual, he adds.
Another drawback to using a lot of specialized or customized lift trucks: “If you have somewhat unique specs, that can hold you back from using short-term rental assets when they’re needed,” Toyota’s Byrd observes. However, a dealer might be willing to invest in unique or specialized configurations for established customers who will regularly rent that equipment, such as during peak seasons.
ASK YOUR DEALER
Each expert we spoke with offered this recommendation: If your circumstances have changed or you have a challenge to overcome, explain the situation to your lift truck dealer. Ask what standard options are available and whether a more flexible arrangement might be possible. A well-capitalized, highly professional forklift dealer will have the knowledge and resources to set up flexible plans, including customized programs. “We work closely with customers to understand their business, and we know there isn’t a one-size-fits-all solution,” Alta Equipment’s Brubaker says. (How has the pandemic affected what fleet managers are asking lift truck dealers for? See the accompanying sidebar.)
Although there are fewer face-to-face meetings nowadays, the importance of open and frequent communication remains, says Stein. “We’ve changed how we connect and communicate, but that shouldn’t change what we can provide to clients,” he says.
Covid-19 changes the conversation
We asked forklift dealers and OEMs whether the Covid-19 pandemic has changed what their customers are asking for. Across the board, the answer was “yes.” Here are a few examples of the kinds of requests they’ve been fielding lately:
Off-site servicing: “Before the pandemic, we would go out and service most equipment on-site, but now we’re being asked to pick up the truck and do the work here more often. I’d say we’re doing only about 40% on-site now, which increases our transportation and handling costs,” says Tom Duck, vice president and general manager of Tri-Lift NC Inc., a Clark forklift dealer.
Payment flexibility: Some customers on fixed maintenance programs have asked for forgiveness or postponement of payments while they manage through fluctuations or a decline in their business, says Tina Goodwin, director of fleet management for Yale Materials Handling Corp. Like others we spoke with, she says her company is working with customers to find more flexible options.
Used vehicles: In addition to rentals, more customers are asking about previously owned equipment to supplement an existing fleet, according to Dan Zinn, director of sales for Crown Equipment Corp. Used equipment can help to fill short-term needs at a lower acquisition cost and without the longer leadtimes of new equipment, he says. It’s also an economical way to acquire backup trucks that can be called into service when needed.
Advice on battery care: When forklift batteries sit unused for a long time, their performance deteriorates. In light of that, facilities that have idled equipment are asking how to keep batteries in good shape, “so when they do need them, they’re in good condition and at the ready,” says Matt Stein, sales and iWarehouse manager at Arbor Material Handling, an authorized Raymond sales and service center.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.