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.
Robots are revolutionizing factories, warehouses, and distribution centers (DCs) around the world, thanks largely to heavy investments in the technology between 2019 and 2021. And although investment has slowed since then, the long-term outlook calls for steady growth over the next four years. According to data from research and consulting firm Interact Analysis, revenues from shipments of industrial robots are forecast to grow nearly 4% per year, on average, between 2024 and 2028 (see Exhibit 1).
EXHIBIT 1: Market forecast for industrial robots - revenuesInteract Analysis
Material handling is among the top applications for all those robots, accounting for one-third of overall robot market revenues in 2023, according to the research. That puts warehouses and DCs on the cutting edge of robotic innovation, with projects that are helping companies reduce costs, optimize labor, and improve productivity throughout their facilities. Here’s a look at two recent projects that demonstrate the kinds of gains companies have achieved by investing in robotic equipment.
FASTER, MORE ACCURATE CYCLE COUNTS
When leaders at MSI Surfaces wanted to get a better handle on their vast inventory of flooring, countertops, tile, and hardscape materials, they turned to warehouse inventory drone provider Corvus Robotics. The seven-year-old company offers a warehouse drone system, called Corvus One, that can be installed and deployed quickly—in what MSI leaders describe as a “plug and play” process. Corvus Robotics’ drones are fully autonomous—they require no external infrastructure, such as beacons or stickers for positioning and navigation, and no human operators. Essentially, all you need is the drone and a landing pad, and you’re in business.
The drones use computer vision and generative AI (artificial intelligence) to “understand” their environment, flying autonomously in both very narrow aisles—passageways as narrow as 50 inches—and in very wide aisles. The Corvus One system relies on obstacle detection to operate safely in warehouses and uses barcode scanning technology to count inventory; the advanced system can read any barcode symbol in any orientation placed anywhere on the front of a carton or pallet.
The system was the perfect answer to the inventory challenges MSI was facing. Its annual physical inventory counts required two to four dedicated warehouse associates, who would manually scan inventory to determine the amount of stock on hand. The process was both time-consuming and error-prone, and often led to inaccuracies. And it created a chain reaction of issues and problems. Fulfillment speed is one example: Lost or misplaced inventory would delay customer deliveries, resulting in dissatisfaction, returns, and unmet expectations. Productivity was also an issue: Workers were often pulled from fulfillment tasks to locate material, slowing overall operations.
MSI Surfaces began using the Corvus One system in 2021, deploying a small number of drones for daily inventory counts at its 300,000-square-foot distribution center (DC) in Orange, California. It quickly scaled up, adding more drones in Orange and expanding the system to three other DCs: in Houston; Savannah, Georgia; and Edison, New Jersey. The company plans to add more drones to the existing sites and expand the system to some of its smaller DCs as well, according to Corvus Robotics spokesperson Andrew Burer.
Those expansion plans are based on solid results: MSI’s inventory accuracy was about 80% prior to the drone implementation, but it quickly jumped to the high 90s—ultimately reaching 99%—after the company initiated the daily drone counts, according to Burer.
“We actually had an incident early on where one of the forklift drivers ran into the landing pad, rendering it inoperable for about a week while the Corvus team fixed it,” Burer recalls. “When we restarted the system, we noticed MSI’s inventory accuracy had dropped down to the 80s. But after flights resumed, accuracy quickly improved back to near perfect.” He adds that such collisions are rare as Corvus mounts landing pads high off the floor to avoid impacts but that accidents can still happen.
Overall, the system has helped speed warehouse operations in two key ways: First, the accuracy improvement means that associates no longer waste time searching for missing material in the warehouse. And second, the associates who used to conduct the physical inventory counts have been reallocated to picking and replenishment—creating a more efficient, and optimized, workforce.
A SAFER, MORE EFFICIENT WAREHOUSE
Robot maker Boston Dynamics is well-known for its Stretch and Spot industrial robots, both of which are at work in warehouses and DCs around the world. Earlier this year, Stretch made its debut in Europe, teaming up with Spot at a fulfillment center run by German retail company Otto Group. The deployment marks the first time Stretch and Spot are being used together—in a partnership designed to improve Otto Group’s warehousing operations by increasing efficiency and making warehouse work safer and more attractive to workers.
The partnership is part of a two-year project in which Boston Dynamics will deploy dozens of its warehouse robots in Otto Group’s European DCs. The first location is a fulfillment site operated by Hermes, the company’s parcel delivery subsidiary, in Haldensleben, Germany—a facility that handles as many as 40,000 cartons of goods on peak days.
At the site, Stretch—which is a mobile case-handling robot—autonomously unloads ocean containers and trailers, using its advanced perception system to pick and place boxes onto a telescoping conveyor inside the container or trailer. Spot—a quadruped robot—helps with predictive maintenance by collecting thermal data and performing acoustic and visual detection tasks throughout the facility to reduce unplanned downtime and energy costs. One of Spot’s jobs is to detect air leaks in the facility’s warehouse automation systems; future duties may include conveyor vibration detection, according to leaders at Otto Group.
Both Stretch and Spot will help the Haldensleben facility run more efficiently, especially during fall peak season when volume increases and work intensifies. The addition of Stretch addresses safety and comfort issues as well: Trailer unloading—a process that entails repeatedly lifting and moving heavy boxes inside a trailer, which can be dark, dirty, cold, and/or hot, depending on the weather—tends to be unappealing to workers. Along with reducing the amount of labor required, automating these tasks will have the added benefit for European facilities of helping them comply with EU (European Union) regulations limiting the amount of time workers can spend in those conditions.
Essentially, the robots are making life easier on the warehouse floor and for the company at large.
“Stretch is going to have a ton of benefits for customers here in the EU,” Andrew Brueckner, of Boston Dynamics, said in a recent case study on the project.
The trucking industry faces a range of challenges these days, particularly when it comes to load planning—a resource-intensive task that often results in suboptimal decisions, unnecessary empty miles, late deliveries, and inefficient asset utilization. What’s more, delays in decision-making due to a lack of real-time insights can hinder operational efficiency, making cost management a constant struggle.
Truckload carrier Paper Transport Inc. (PTI) experienced this firsthand when the company sought to expand its over the-road (OTR), intermodal, and brokerage offerings to include dedicated fleet services for high-volume shippers—adding a layer of complexity to the business. The additional personnel required for such a move would be extremely costly, leading PTI to investigate technology solutions that could help close the gap.
Enter Freight Science and its intelligent decision-recommendation and automation platform.
PTI implemented Freight Science’s artificial intelligence (AI)-driven load planning optimization solution earlier this year, giving the carrier a high-tech advantage as it launched the new service.
“As PTI tried to diversify … we found that we needed a technological solution that would allow us to process [information] faster,” explains Jared Stedl, chief commercial officer for PTI, emphasizing the high volume of outbound shipments and unique freight characteristics of its targeted dedicated-fleet customers.
The Freight Science platform allowed PTI to apply its signature high-quality service to those needs, all while handling the daily challenges of managing drivers and navigating route disruptions.
STREAMLINING PROCESSES
Dedicated fleets face challenges that evolve from day to day and minute to minute, including truck breakdowns, drivers calling in sick, and rescheduled appointment times. PTI needed a tool that allowed for a real-time view of the fleet, ultimately enabling its team to adjust truck and driver allocation to meet those challenges.
The Freight Science solution filled the bill. The platform uses advanced analytics and algorithms to give carriers better visibility into operations while automating the decision-making process. By combining streaming data, a carrier’s transportation management system (TMS), machine learning, and decision science, the solution allows carriers to deploy their fleets more efficiently while accurately forecasting future needs, according to Freight Science.
In PTI’s case, Freight Science’s software integrates with the carrier’s TMS, real-time electronic logging device (ELD) data, and other external data, feeding an AI model that generates an optimized load plan for the planner.
“We’re an integrated data analytics company for trucking companies,” explains Matt Foster, Freight Science’s president and CEO. “We’re talking about AI.”
The benefits of the real-time data are difficult to overstate.
“We’ve been able to execute in the toughest of situations because we’ve got real, live data on how long each event is actually going to take and a system to aid and even automate the decision-making process,” says Chad Borley, PTI’s operations manager. “From what traffic patterns we are battling in the morning and evening with rush hour and things like that, to the impact of additional miles to a route, or even location-specific dwell times, it’s been a huge differentiator for us.”
REALIZING RESULTS
A case in point: the collapse of Baltimore’s Francis Scott Key Bridge in March. PTI was scheduled to go live with a new dedicated account in the area just days after the collapse, which would mean rerouting and the potential for longer transit times. Instead of recalculating based on assumptions or latent data, PTI was able to reroute freight based on real-time information and analytics to give the customer timely updates.
“With the bridge going out, that changed our ability to make as many turns a day as the customer would expect,” Stedl explains. “But one of the things Freight Science could do [was to] quickly [assess] how much of an impact that traffic would have [and] what the turns [would] be based on what’s happening on the ground.
“So we were able to go back to the customer and readjust expectations in a real way that made sense, using data. Now expectations can be reset¾we’re not asking for forgiveness when there’s no reason for it.”
The system’s advanced algorithms make load planning more cost-effective and scalable as well. The platform allows PTI to monitor trucks, trailers, and driver hours in real time, recommending additional loads with remaining driver hours that would otherwise be wasted.
And they’re doing it all with much less. Stedl says tasks that used to require five people and hours of work can now be accomplished by one person in mere minutes, improving productivity and profitability while reducing labor and operational costs.
The notice of proposed rulemaking suggests a new standard that would require that:
certain pipeline, freight railroad, passenger railroad, and rail transit owner/operators with higher cybersecurity risk profiles establish and maintain a comprehensive cyber risk management program;
these owner/operators, and higher-risk bus-only public transportation and over-the-road bus owner/operators, currently required to report significant physical security concerns to TSA to also report cybersecurity incidents to CISA; and
higher-risk pipeline owner/operators adopt TSA's current requirements for rail and higher-risk bus operations to designate a physical security coordinator and report significant physical security concerns to TSA.
The publication of a “notice of proposed rulemaking” in the Federal Register typically begins a 60-day period for public comment from any interested party, and an additional 30 days for reply comments.
"TSA has collaborated closely with its industry partners to increase the cybersecurity resilience of the nation's critical transportation infrastructure," TSA Administrator David Pekoske said in a release. "The requirements in the proposed rule seek to build on this collaborative effort and further strengthen the cybersecurity posture of surface transportation stakeholders. We look forward to industry and public input on this proposed regulation."
The notice came a week after a White House representative warned the trucking freight industry that the People’s Republic of China (PRC) has remained the most active and persistent cyber threat to the U.S. government, private sector, and critical infrastructure networks. The briefing came from a member of the administration’s Office of the National Cyber Director, in an address to attendees at the National Motor Freight Traffic Association (NMFTA)’s Cybersecurity Conference.
“In January, the National Cyber Director testified in front of Congress along with colleagues from CISA, NSA, and the FBI about this threat from the PRC, dubbed Volt Typhoon,” speaker Stephen Viña said in his remarks. “Volt Typhoon conducted cyber operations focused not on financial gain, espionage, or state secrets but on developing deep access to our critical infrastructure. This includes the energy sector transportation systems, among many others. A prolonged interruption to these critical services could disrupt our ability to mobilize in the event of a national emergency or conflict and can create panic among our citizens. Ultimately, if trucking stops, America stops.”
Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.
Founded in 1980 and headquartered in Durham, U.K., Indigo Software provides software designed for mid-market organizations, giving users real-time visibility and management from the initial receipt of stock all the way through to final dispatch of the finished product. That enables organizations to optimize an array of warehouse operations including receiving, storage, picking, packing, and shipping, the firm says.
Specific sectors served by Indigo Software include the food and beverage, fashion and apparel, fast moving consumer goods, automotive, manufacturing, 3PL, chemicals, and wholesale / distribution verticals.
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.