The year ends with solid order books, healthy balance sheets and positive earnings among most of the major materials handling manufacturers around the world, but the sector faces significant challenges.

John Paxton, CEO of US-based industry group MHI, is among those noting ongoing economic uncertainty, inflation and high-interest rates which impacted on supply chains in 2023. 

“While we anticipate that inflation will ease in 2024, these risks will continue to impact operations,” he says. 

Similar factors are identified by John L. Gelsimino, board chairman at MHEDA, who also sees cyber attacks, employee pressures/mental health and continued supply chain challenges.  

In the UK, the effects of Brexit, world conflicts and the disruption to production caused by COVID-19 continue to impact the supply chain, affecting both components and machinery, according to Geoff Martin, chairman of CFTS, the certification arm of the UK Material Handling Association (UKMHA).

Most experts, however, identify labour shortages as the major challenge facing the sector.

CFTS’s Martin explains that in the UK, there is an ongoing problem of Competent Persons retiring and too few new trained engineers entering the materials handling workplace. 

Liam Knight, managing director of training body AITT, says the skills shortage has impacted directly on training. “On the back of an exceptionally busy 2022, the result of pent-up demand following COVID, 2023 saw strong demand for training in the UK with high levels of AITT registrations. This kept training providers very busy and caused some delays in delivering training on forklift trucks and other workplace transport. At the same time, and in line with almost every other sector, materials handling training providers continue to be affected by rapidly rising costs,” he explains.

Paxton points to MHI’s 2023 MHI Annual Industry Report finding that 74% of respondents are planning to increase their investment in supply chain technology to address skills shortages.

The perennial issue of safety is also highlighted by most industry leaders, with AITT’s Knight pointing out that “the number of deaths and injuries around the world involving materials handling equipment in 2023 remained stubbornly high. This is further evidence of the need for more and better training from properly qualified and accredited providers.”

This year, National Forklift Safety Day was again marked on both sides of the Atlantic. The 10th Anniversary of NFSD was highlighted by public events held in Washington, DC on June 12 and 13, while in the UK, activities were backed by the slogan ‘Safe Sites Save Lives’.

In Australia, meanwhile, AFITA presented its annual Safety Week Seminars at the Workplace Health and Safety Show in Brisbane in late May/early June.

Ross Moloney, CEO of peak body LEEA, notes that safety is a continual challenge faced by the lifting industry. “As we reach higher and further, the challenge becomes ever greater, involving more complexity and danger. Throughout 2023, our goal was to highlight the importance of high standards, safe practices and technological innovation that showcases to end users how important safe lifting is in their own sectors.”

Looking ahead

At the time of publication, wars are waging in two regions, inflation remains high and many sectors are still trying to overcome some of the repercussions of the post-COVID supply chain difficulties.

There are mixed predictions for the year ahead.

MHEDA’s Gelsimino anticipates a drop in demand for materials handling equipment “while many companies are sitting on record inventory levels financed at the high rates of interest”. 

He predicts that this will lower street pricing for equipment and impact OEM factory order volumes, but he believes the dealer aftermarket business should remain strong.  

Manufacturers like Jungheinrich are already witnessing some of MHEDA’s anticipated trends. In its latest market update, the German manufacturer notes that orders for trucks declined noticeably in the third quarter. “Jungheinrich achieved new revenue and earnings records in the first three quarters,” chairman Lars Brzoska, told shareholders. “However, the economy slowed markedly over the course of the year, particularly in Europe and the USA. At the same time, geopolitical risks increased further. In light of these developments, we noticed a clear decline in truck orders in the third quarter. Cumulatively though, incoming orders remain above the previous year’s level.”

Similarly, industrial giant KION confirmed that due to the slowdown in market growth, the number of new trucks ordered in the Industrial Trucks & Services segment fell by 23% in the third quarter of 2023. “Figures for the EMEA and Americas regions were down significantly compared with the first nine months of 2022. The impact of customers bringing forward their orders in 2022 in response to longer delivery times and the announcement of price rises was particularly pronounced in the first half of 2023,” the company says in its latest analysis.

The APAC region defied the trend for KION, with unit sales higher in the reporting period than in the prior-year period.

On the back of a strong third quarter, Konecranes CEO Anders Svensson says: “Our demand environment has remained good so far, although the macroeconomic indicators have signalled weakening operating conditions throughout the year. We continue to see some signs of slowing down within our industrial customer segments, but at the same time, we expect demand to remain on a healthy level.”

Similarly, Cargotec president and CEO Casimir Lindholm notes that his company is operating in an increasingly complex business environment due to geopolitical uncertainty, high interest rates and low consumer confidence.

“Despite prevailing market uncertainty, I feel confident about our future. We have made significant progress in many areas and with the cost saving actions, combined with continuous improvements and investments, we aim to safeguard our profitability and keep our core businesses' comparable operating profit above 10% even in challenging market conditions,” he says.

German industrial representative group VDMA is circumspect about the slowing decline in orders in that market.

VDMA economic expert Olaf Wortmann observes that "there is still far too much uncertainty in the market and among investment decision-makers to declare an end to the decline in orders just yet. In addition, the remaining order backlogs are dwindling as bottlenecks in the supply chains ease. This is having a negative impact on production and sales," adds Wortmann. 

The association reports a 13% drop in orders in three-month period from August to October 2023 compared to the previous year. There were 15% fewer orders from Germany and 12% fewer orders from abroad. The Euro countries remained 16% below the previous year's level, while the drop from non-Euro countries was 11%.

In the United States, Terex is confident of continued growth. Its most recent financial update notes a 15% increase in sales and a 46% improvement in earnings over the prior year. Chairman and chief executive officer John L. Garrison, Jr. says: “We remain confident in our ability to execute on our strategy to deliver long-term shareholder value."

Fellow American manufacturer OshKosh also reported strong sales volumes in its last market update, with president and chief executive John Pfeifer saying “demand remains strong across the board for our industry-leading products and services, highlighted by robust orders in the quarter”. 

“We ended the quarter with a consolidated backlog of USD15 billion, which provides solid visibility well into 2024.”

For MHI’s Paxton, meanwhile, 2024 is tracking to deliver more stable, slow-growth economic conditions, with the association tipping a decline in inflation and interest rates for the second half of 2024. 

“Ongoing geopolitical global struggles such as the Ukraine and the Israeli-Palestinian wars are expected to produce ongoing negative economic conditions and will likely continue to push up crude oil prices, contributing to inflation. Meanwhile, further attacks upon Israel could affect the country’s production of advanced chips. Some of those major facilities are located close to the borders. This has the potential to further exacerbate the global chip shortage that plagued such industries as automotive and consumer electronics.”

Paxton believes emerging technologies such as AI and robotics will continue to impact supply chains and the people who work in the space. “The collaboration between workers and new technologies will create new opportunities for human workers and help mitigate the worker shortage,” he predicts.

“We also see the push for sustainability in supply chains escalating as more progress will likely be made in regulating emissions transparency and emissions reduction. In addition, cybersecurity is an ongoing risk to operations that are becoming more tech-forward.”

CFTS’s Martin warns that “like all businesses, CFTS-accredited companies will need to manage high energy prices, and supply chain issues, as well as meeting increased customer expectations. All the evidence suggests that they are succeeding in that endeavour.”

AITT is anticipating a more stable year in 2024, but notes that a globally uncertain economy could affect training providers in a variety of different ways. “For some, it could mean lower demand as businesses lack the financial resources to fund training courses. For others, it could result in greater availability, though this, in turn, may be mitigated by a continuing shortage of instructors,” says Knight. 

Preparing for 2024

The materials handling industry has overcome significant hardships in the past few years, and both suppliers and end-users have shown resilience, flexibility and innovation. Those qualities may well be called upon to navigate through the year ahead.

MHEDA’s advice for the coming year would be to stay ahead of the curve when it comes to technology investment and creating a collaborative and human-centric environment for future efficiency and growth.

“If you don’t have a sustainability plan in place yet, make plans now to collect and measure your operational greenhouse gas data and collaborate with your suppliers to measure and reduce your Scope 3 emissions impact,” Gelsimino advises.

“Learn from and connect with thought leaders in this industry by participating in supply chain events,” he adds, noting that MODEX 2024 will include more than 150 educational sessions. 

While CFTS’s message is aimed at its UK audience, much of Martin’s advice is more broadly applicable: “With a shortage of qualified engineers throughout British industry, we would encourage members to be creative in maximising staff retention. That means investing in good quality training and offering flexible working conditions including a combination of competitive salaries and benefits.

“In our marketplace, I would advise truck users as well as those who sell and support materials handling equipment to look for every advantage.”

AITT’s advice for 2024 centres around encouraging employers to be ever more vigilant when recruiting new staff. “Whether they are temporary, agency or permanent staff, it is important to check the validity of their certificate(s). In the UK, doing so is very quick and straightforward thanks to our online system that allows employers and recruitment agencies to enter an operator’s ACORNS number into our AITT online tool at any time of day or night and find out instantly if training is accredited and legitimate,” says Knight.

For the lifting industry, the focus remains on safety.

“A safety culture will be aided by a better trained workforce at all levels,” says LEEA’s Moloney. “There are few excuses today for not improving knowledge and learning techniques that will lead to safer practice, with more courses available that are more accessible than ever through online learning. In addition, we now have the opportunity to start recruits with the solid foundation of a lifting apprenticeship, available in England, that ensures they carry best practice throughout their career, rather than picking up unsafe habits from older colleagues.”

The final word on the perennial skills shortage issue comes from Christophe Lautray, executive vice president sales and service at KION Industrial Trucks and Services and president of the European equipment manufacturers’ peak body, FEM:

“My vision is that our industry is to be recognised as a leading employer that attracts, develops, and retains the best talent from diverse backgrounds around the world. This vision is grounded in sustainability, and we strive to be leaders in environmental responsibility and social impact. 

“In today’s fiercely competitive talent landscape, we understand that diversity and inclusion are not just buzzwords; they are business drivers and magnets that draw in and retain the brightest and most diverse minds, creating a dynamic tapestry of skills and perspectives,” he wrote in a message to industry peers. 

Lautray is urging colleagues to create an environment where everyone feels valued, respected and included. 

“Our goal is not only to retain and develop our existing talent but also to be the industry beacon that beckons top candidates from diverse backgrounds, offering them a place where their unique talents are embraced. Together, we are dedicated to ensuring that the material handling industry remains a leader in innovation, sustainability and as the destination of choice for the world’s most talented individuals, ready to shape the future.”