It’s safe to say the industrial lift truck market has been somewhat volatile over the last 5 years. The market reached all-time highs during the pandemic and then saw massive swings downward the past two years. While most lift truck OEMs enjoyed the spike in sales, the enormous demand put a significant strain on the supply chain, forcing lead times out to unprecedented levels while driving up costs.
The sharp decline we have experienced should be viewed more as a normalization or correction to a market that was way overinflated. With all the pent-up demand from the excessive orders due to the elongated pandemic lead times, we are now experiencing an abundance of stock on hand at both the OEM and distribution levels. On the surface, a market quickly becoming half of what it was two years ago looks catastrophic; however, compared to the past 15 years, today’s market is still relatively healthy.
Will 2025 and the hopes of lower interest rates bring more investments into new industrial trucks?
Many factors, including interest rates, play a role in the level of investment in industrial truck fleets. The most significant of those factors is consumer confidence. Logically, when consumers are confident, they buy more, which means manufacturers will have to make more, and lift trucks will have to move more. While inflation and high interest rates have indeed stifled consumer confidence these past four years, there are clear signals that a new, more business-friendly administration will work in conjunction with lower interest rates to help stimulate consumer confidence. This consumer confidence will in turn drive the economy, empowering more people buying goods and services, thereby helping drive more investments in the industrial equipment designed specifically to move it. drive more investment in industrial equipment.
How proposed tariffs from the new administration could help or hurt businesses:
The industrial lift truck market is global in nature, with a complex supply chain scattered worldwide. The proposed tariffs on countries like Canada, Mexico, and China will undoubtedly impact the industrial market, depending on the manufacturer. All lift truck manufacturers will experience varying levels of impact due to the tariffs. While many will argue these tariffs will be passed onto the customers in the form of price increases, the long term benefits behind such actions are good in that they are designed to incentivize companies to reevaluate their supply chains and bring more manufacturing capacity back into the United States, which is a good thing.
The market has moved from internal combustion products to electric vehicles in recent years. How could the new administration impact IC demand:
As anyone involved with the industrial lift truck market knows, California has been the driving force behind the electrification of the market – forcing organizations that operate in the State of California away from lift trucks that run on fossil fuels. While there have been no changes in the stringent regulations imposed by the California Zero Emission Forklift Initiative, which essentially eliminates the sale of spark-ignited internal combustion forklifts starting in 2026, many expect an easing in such regulations. Yet, aside from the legislative pressures, there continues to be a strong value proposition which justifies making the switch over to electric powered by lithium.
Technological advancements in lift truck systems, battery technology, and charging platforms have all combined to make moving to electric more feasible than ever before. The United States continues to be one of the only Westernized nations still using internal combustion engine equipment indoors. With these technological advancements in place and building momentum, we anticipate it will not take long before the thought of using internal combustion lift trucks indoors will become as incomprehensible as smoking on a plane or in a restaurant.
How E-Commerce has raised demand:
Labor constraints today have been a significant challenge for operations that require the operation of lift trucks. With the massive movement to E-Commerce, there is a much higher need for lift truck operators in warehousing and distribution environments. The lack of skilled labor has pressured companies to invest in technologies that help operations accomplish more with less. As a result, more and more operations are looking to employ various levels of automation in their industrial lift truck fleets.
The competitiveness of robotics solutions in the forklift industry:
For many years, the industrial lift truck manufacturers viewed automation and AGV companies as competitors, but we’ve experienced a significant change in that thinking over the past decade. What was a threat has now become a strength for the lift truck manufacturers. Almost all lift truck manufacturers today have expanded their technology capabilities to such a level that they can now offer automated versions of their standard equipment with improved ROI calculations.
Today’s industrial trucks offer more safety features than ever, yet nothing improves safety more than a well-trained operator:
With advancements in technology, all lift truck manufacturers are playing their part in developing new technologies that allow for the safe operation of their equipment. While there are various means by which manufacturers have applied these technologies, there is no substitute for a sound operator safety training program. A trained operator will always be the number one way to reduce the likelihood of workplace incidents involving lift trucks. In addition to having fully trained operators, many manufacturers offer optional operator assistance systems that may improve workplace safety for both the operator and those working around lift trucks.
Lease vs. buy:
In the lease vs buy, each organization must evaluate several factors when considering what is right for their application and company. In leasing, you enjoy a lower monthly cost and can be flexible on the lease terms. If you have a high-use environment where you may need to renew equipment more often, leasing clearly has its advantages. In addition, a lease is usually treated as an operating expense on the income statement. At the same time, a financed forklift is considered an asset on the balance sheet, and depreciation expense is recorded each period. If you use the asset less often and plan to keep it over the life of a typical lease (5 years), then the benefits of a straight purchase or finance outweigh that of a lease.