Shortages and delays linger

Local News
- 1 Jul 2021 ( #1032 )
6 min read
Container shortage adds to manufacturers' woes PHOTO: XCHANGE
Container shortage adds to manufacturers' woes PHOTO: XCHANGE
By Allan Leibowitz
Forklift manufacturers are under pressure and many are unable to take advantage of rising demand for their products because of serious supply chain challenges.

The experience of Clark Europe is fairly typical. President and CEO Rolf Eiten says his company is facing the challenge of supply bottlenecks for parts and materials. "As a result, we have extremely long delivery times for new factory orders. In addition, the prices for raw materials - especially for steel - have risen very sharply," he says.

Spanish compact industrial vehicles manufacturer AUSA is in the same boat, according to Enric Viñas, supply chain director: "We (are suffering) delays from many suppliers due to the shortage of raw materials and some components such as semiconductors. Due to the limited supply and the very high demand, especially in terms of metallic raw materials, there has been a significant price increase.

"The shortage of components is causing us some delays and inefficiencies in our production lines, which sometimes does not allow us to meet our timings," he adds.

Walter Haberl, product line leader, self-propelled lifting solutions at Palfinger, says his company, like others, has been subjected to the rising costs for raw materials and capacity constraints.

"Palfinger, early on, has implemented a policy of proactive warehousing, multiple sourcing, strategic partnerships and long-term delivery contracts. These measures proved to be successful already during the first lockdown in 2020. With COVID-19, the world has experienced one of the most drastic economic collapses in modern history. Thanks to vaccination programs, the world economy is bouncing back with force. Both developments are far from normal. I expect a return to normal prices and an uninterrupted supply chain (by 2022 at the earliest)."

Clark's Eiten concedes that "long lead times are becoming more and more of a burden", especially with a healthy order book. He takes some consolation in knowing that "some of our competitors have even longer lead times than we do".

Clark, he says, has intensified its collaboration with suppliers to accelerate materials procurement. "This means we have been on site at our suppliers to see how we can support them. For example, we have ordered parts by prepayment to help the suppliers. Alternatively, we are also looking for new suppliers or have changed suppliers. We have expanded our components and changed forwarders to save money."

According to Viñas, AUSA has "doubled production tools to increase the capacity of our production lines, we are purchasing components with urgent air shipments and getting different sources of supply to shorten the processes".

He admits, however, that the global context makes accurate forecasts unpredictable.

Shipping constraints
As if it wasn't enough that manufacturers are facing supply shortages, they are also having to cope with shipping challenges.

AUSA, like others, has been affected by the shortage of shipping containers, "causing continuous disruptions in our supply chain", says Viñas.

Shipping delays are particularly harmful to importers like Noblelift. Don Hwang, sales manager of Noblelift North America, says his company has to deal with major congestions in the ports of California as well as delays of availability to load onto the cargo ships overseas - not to mention "outrageous price gouging".

He is also skeptical of the claims that the delays and hikes are directly related to increased demand and not enough empty containers available to load and ship. "I have seen local Amazon and Walmart distribution centres in just Ontario, California with over 100 empty containers at each of their facilities," he notes.

Rising freight costs are also a major concern for Clark, according to Eiten. "Since new trucks are transferred from our factories in Korea, China and Vietnam, we also have to deal with extremely high container freight costs. All in all, we are facing a very difficult period of time," he observes.

Buyer implications
A recent survey by the US-based Institute of Supply Management (ISM) found ongoing concerns about risk to suppliers and shipment delays, with more than half of the respondents worried about shipment and supply failures.

The supply chain breakdowns mean longer waiting times and higher prices for end-users, placing strains on manufacturers' relationships with their customers and dealers.

As Noblelift's Hwang sees it, the current challenges "will cause economic fall-out, with price increases for all manufacturers that are forced to pass them along to their dealers and customers".

Palfinger's Haberl says as a result of his company's proactive management, "we are able to minimise the impact on our customers and end-users".

"We ... guarantee transparency on our delivery schedule, so everyone is up to date at any time," he explains.

Eiten notes that many dealers and customers were not expecting long lead times and now need help in procuring new materials handling vehicles and rental fleets. "In order to alleviate this situation a little, we are currently in the process of driving our second-hand business forward. Clark has started to completely refurbish old Clark trucks. At this point, we can say that we have sold the first refurbished Clark trucks very successfully."

Eiten's advice to customers whose fleets are about to be phased out is to order new trucks six months before the originally planned deployment date due to the long lead times. "Due to the higher freight costs and the sharp increase in steel prices, customers must also calculate ... higher prices for new trucks," he says.

"I would generally (advise) our dealers and distribution partners to keep a higher stock of new trucks and spare parts in their local stock than they usually do," he adds.

Juan Urkijo, sales and marketing director at AUSA, says his team is working tirelessly "so that the client notices these supply inefficiencies as little as possible". However, some delays in the delivery of machinery and spare parts have been unavoidable - although the situation is improving. "Fortunately, we see a small progressive improvement, so we can only ask for a little patience so that the situation comes back to normal. (Customers) know first-hand that at AUSA, we are looking for all possible solutions so that they do not notice these inconveniences," he says.

Palfinger's Haberl stresses that communication is more important than ever: "Get in touch with our Palfinger sales representatives as early as possible. They will keep you up to date. And what is even more important, together with you, they will work out how to successfully bypass potential delays," he advises.

Noblelift's Hwang's advice is: "Take advantage of the pricing now before another price increase."

While prices are almost certain to rise, the good news, according to ISM, is that "companies are continuing to adapt to the changing environment created by the COVID-19 pandemic and feel bullish, particularly about the second half of 2021".

Chief executive officer Thomas W. Derry notes that "there is a strong positive sentiment that business activity will be substantially better than in 2020, and revenue, CAPEX and demand for products are all expected to increase this year".

However, Derry does warn that supply constraints, notably in shipping and freight, scarcity of many raw materials and components, "are limiting the ability of some firms to take maximum advantage of the surge in aggregate demand".

A number of leading suppliers declined to comment for the record.
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Previously about:
Briefs News Story - 6 Jul 2023 - 2 min read
AUSA appoints Greek importer News Story - 22 Jun 2023 - Athens, Greece - 1 min read
Ahern distributes Ausa in Denmark News Story - 23 Feb 2023 - Barcelona, Spain - 2 min read
Lower emissions a major focus at LogiMAT News Story - 11 Apr 2024 - Stuttgart, Germany - 5 min read
BSLBatt launches new lithium-ion pallet jack battery News Story - 9 Nov 2023 - Huizhou, China - 1 min read
Clark launches new electric stacker News Story - 24 Aug 2023 - Duisburg, Germany - <1 min read
US economic growth to continue in 2020 - ISM News Story - 12 Dec 2019 - Tempe, AZ, United States - 3 min read
Noblelift expands North America HQ News Story - 3 Nov 2022 - Des Plaines, IL, United States - 1 min read
Product news News Story - 24 Jun 2021 - 3 min read
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