The new year brings significant challenges and opportunities
By Allan Leibowitz
Last year was marked by significant geopolitical uncertainty, fragile economic growth and a plethora of technological advances, giving forklift manufacturers, vendors, buyers and end-users significant challenges and opportunities.
canvassed a number of industry leaders about the issues they faced in 2019, the changes they witnessed and what this all means for the sector in 2020.
For the materials handling industry in the United Kingdom, there's no doubt the biggest single issue of 2019 - and continuing into 2020 - was Brexit. The recent UK election has reinforced the inevitability of Britain's departure from the European Union, but the detail is still unclear, and the industry will have to deal with ongoing uncertainty.
To date, the uncertainty has been a double-edged sword for materials handling: on the one hand, hampering equipment sales as organisations delayed their purchase decisions and, on the other, stimulating demand to cope with pre-Brexit stockpiling.
Peter Ward, CEO of the UK Warehousing Association (UKWA), notes that the latest Brexit delay is likely to have minimal impact on demand for storage space (and, by the same logic, warehouse equipment). "Those companies that prepared for Brexit did so in the run up to the original March deadline. Data collected by UKWA in September showed little evidence of further stockpiling after April in preparation for October, and we expect little to change in this next period, especially now that the threat of a cliff-edge fall-out has been significantly reduced," he tells Forkliftaction News
"UKWA has consistently highlighted that the UK's withdrawal from the EU, whatever the outcome, and whatever the timing, is likely to drive a long-term demand for additional warehousing. Should the UK divert to WTO terms for its trade to and from the EU, some 200 million extra customs declarations will be required, with border checks on animal and plant imports. Such interruptions in the supply chain will naturally lead companies to hold more inventory in their supply chain and, therefore, more warehouse capacity will be required."
While there's not much the industry can do about Brexit, there are other issues which are demanding attention.
Tim Waples, chief executive of the FLTA, notes the growing skills shortage which is most evident in the dwindling population of service engineers. He says his organisation is working with industry trainer F-TEC to address this. "F-TEC and the FLTA have been very successful in both recruiting apprentices and in providing upskilling programs, but the industry needs to do its part in creating places for apprentices and offering training opportunities to semi-skilled staff members or job applicants."
Among the trends FLTA saw last year, Waples identifies increasing environmental legislation on carbon emissions which is leading to an intensifying shift from internal combustion engine machines to electric lift trucks. "Stage V European emission regulations came into effect in early 2019 and placed more stringent demands on fuel efficiency and consumption. But technology is having to become more sophisticated in order to meet these new standards," he explains.
Trade tensions were sparked by the imposition of a 25% tariff in the United States on 1,300 types of Chinese imports
Across the Atlantic, 2019 saw the United States soften its tariff regime on imported Chinese forklifts. A number of importers have succeeded in having the tariffs removed, promising to pass on the savings to buyers.
The major industry associations have declined to comment on the trade war, focusing instead on broader challenges.
MHI CEO George Prest, like his FLTA counterpart, also identified the shortage of skilled workers as a major issue.
Specifically, he laments the lack of workers "who can implement Nextgen technologies including managing and gaining insights from the onslaught of data coming from digital supply chains".
"This has been a constant topic of all six of MHI's Annual Industry Reports and will also be a part of the 2020 MHI Annual Industry Report we will be debuting at MODEX 2020 this coming March in Atlanta."
For Prest, the rise of artificial Intelligence (AI) in supply chains was one of the big innovations of 2019. "Adoption is currently around 13%, but it is expected to jump to 62% over the next five years. AI is at the top of the four stages of digital adoption in MHI's Digital Consciousness Index," he explains.
MHEDA director Michael Vaughan, chief financial officer of Liftech, says his organisation continues to contemplate the rapidly changing technology environment and how e-commerce is disrupting traditional methods to market for distributors. "Industrial truck dealerships are being challenged to understand how forklifts and automated systems can be collaboratively designed to deliver the maximum benefits to customers. And customers are looking more and more to dealerships to manage data of their operations and this requires the use of technology to achieve timely accumulation and evaluation. E-commerce and the availability of data enables customers to gather a significant amount of information about their anticipated purchases and this results in limited time spent with field sales representatives. Dealerships will need to adapt to the new age of selling," he says.
Fellow MHEDA director Mike Wall, president of CSI Materials Handling, notes the United States is riding an unprecedented wave of strong economic conditions. "We are overdue for a downturn and there are signs indicating that it has already begun. Plan accordingly," he advises.
Wall is also cognisant that the unemployment rate is at a historic low. "Good employees are highly sought-after. Make sure to take care of your people as they would be very difficult to replace," he says.
Financial results from late last year included revised earnings forecasts from the major European manufacturers, most of which are anticipating falling demand in their key markets and product sectors.
Linde's Andreas Krinninger
Andreas Krinninger, chairman of the board of management of Linde Material Handling, tells Forkliftaction News
that economic uncertainty will continue and "will require flexibility and responsiveness from both our customers and us".
"We have prepared ourselves to be able to manage market increases or decreases swiftly. With our customers, we engage to identify process and equipment adjustments that support them in managing in these challenging times. Together, we question processes and optimise materials handling workflows - to make processes faster, safer and more cost-efficient.
"In times of uncertainty, we recognise that customers turn to those they trust. Therefore, we are quite proud of the strong demand that we see for our offering. This underscores the trust in Linde Material Handling as trustworthy experts and as a partner providing performant and efficient solutions," he says.
The global economic uncertainty is also front of mind for Davide Roncari, president and CEO of Cascade Corporation. "In the past year, certain economic indicators have shown a slowdown in most global markets along with tariff sanctions, adverse political situations, impending Brexit and more. These economic conditions certainly could continue to pose a challenge for the industry in 2020, but the hope is that the global market will only have a short setback.'
Fortunately, he observes, Cascade is a global company with sales, distribution and manufacturing in 30 locations around the world. "This enables us to respond to the needs of local markets, reduce logistics costs for the customer, and mitigate the impact of these shifts." As for Brexit, "Cascade is in a unique position to offset some of the Brexit impact as it's the only attachment and fork company to own facilities on both the European mainland and the UK with our fork plant in Manchester."
Hangcha displays its products at a trade show
China, one of the world's largest markets and for many years a major growth engine for the whole industry, is also slowing.
Hangcha spokeswoman Tina Lou cites statistics from CITA indicating sales volumes of around 306,000 units for the first half of last year - down 0.31% year-on-year. "The main reasons are that the global economic growth is slowing down, China-US trade frictions are intensifying, and the domestic economy is in decline," she explains, noting that the industrial vehicle market has entered a period of adjustment.
For Mark Manninen, vice president of sales and marketing for UniCarriers Americas Corporation, tariffs were probably the largest factor, influencing a market volume decrease of between 10% and 12%. "For the Latin American market, geopolitical instability also had a strong influence.
"In addition, the impact of labour shortages is making it challenging for forklift users to find operators, which is driving the increased interest in automation. We're seeing the need for automation over traditional materials handling being more and more commonplace," he says.
Shifts in power solutions
The evolving nature of logistics, with the growth of 24/7 urban warehouses, is one of the key drivers of change, according to Paul Murray, JCB's Teletruk general manager.
He identifies the growing need for quiet, pollution-free operations: "The fact is emissions, noise and the need to maximise all available space are as important as productivity and running cost considerations when it comes to choosing materials handling equipment for an urban warehouse operation."
JCB's electric 30-19E
Murray explains that while IC engine-powered models in the JCB Logistics Teletruk range meet the most stringent emissions regulations, JCB is experiencing huge interest in its electric-powered Teletruk range from companies that operate facilities within or close to residential areas.
"Like all battery electric forklifts, electric Teletruks give off no harmful emissions. They are also quiet in use. JCB is a leader in innovative clean diesel technology but our launch of an electric-powered model means the Teletruk can be used both inside and outside a store," Murray says.
John Maguire, managing director of Narrow Aisle, also notes a shift in power sources. "We believe that many users of LP gas-powered handling equipment in warehousing are switching to machines that run on lithium-ion batteries as the ideal way of reducing running costs, exhaust emissions and operational noise levels," he says.
"LPG is costly and linked to global oil prices, and from an operational point of view, the time taken to change or fill each gas bottle means that truck downtime can be a problem for some high utilisation customers. If a bulk tank can be justified, then storage of multiple bottles can be avoided."
Maguire adds that the control systems and catalytic converters required to reduce the risk of carbon monoxide emissions from LPG engines add significantly to a truck's operating costs, "so it's easy to see why many people are talking about lithium-ion trucks as a cost-effective alternative to LPG machines".
Martin McVicar, CEO and co-founder of Combilift, also identifies emissions requirements, especially the new diesel engine emissions standards, as the reason many customers are moving over to LPG or electric-powered trucks. Combilift's solution is to offer two types of engine: certified engines for the more regulated markets and non-certified ones for the non-regulated/developing markets. "From a manufacturer's point of view, this may make for more complexity in the production process (as most manufacturers find it easier to implement any changes across the board), but we want to be able to offer our customers products that are the most convenient for their use, for reliability and for after-sales service."
Robin Behnam, a spokesman for French manufacturer Manitou, says his company anticipated "the energy transition phenomenon" a few years ago and shifted its production accordingly from diesel to electric, but also from diesel to LPG and dual fuel. Like Combilift, Manitou "takes into account the specifics of each country and its level of industrial maturity".
The shift towards electrics also impacts the attachment market, according to Cascade's Roncari: "Market trends are showing a greater adoption of electric forklifts along with the need to minimise the impact on the environment, so the ability to optimise attachments to reduce energy use is becoming increasingly important. Our energy efficient designs, like the hydraulic systems on our paper roll clamps and carton clamps for example, use less energy during operation and maximise lift truck efficiency."
New site will allow JT Energy Systems to massively expand its capacity
Many in the industry, like FLTA's Waples, see lithium-ion battery technology as one of the big trends continuing in 2020. Waples attributes its popularity to the charging ability and lengthier life spans that support longer shifts.
Lithium-powered equipment is comprising a growing share of production for Europe's largest manufacturer, Jungheinrich - so much so that the company formed a joint venture, JT Energy Systems, to meet the growing demand.
Late last year, JT acquired the former Solarworld plant in Freiberg near Dresden in order to "massively expand its capacity"; in the process, creating the largest European production centre for batteries and charging systems in intralogistics.
UniCarriers' Manninen also notes the accelerated interest in lithium-ion batteries for companies looking for an alternative power source and a continued interest in "smart" systems and machines - telematics, predictive analytics, advanced fleet management, etc. "It's been exciting to experience the continuous advancements that have been made year over year," he says.