Park Logisitics - Creating Supply Chain Solutions

Park Logistics - Creating supply Chain Solutions

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FORK TRUCKS – Short-term hire could destabilise forklift market

chazStrained and uncertain business conditions are understandably encouraging businesses to avoid long-term commitments to hire or buy forklifts and instead move towards short-term hire. The unwary, however, could slip up if they are sloppy over vetting procedures.

Jungheinrich reports a significant switch to short-term hire and believes that the growth in this market may soon rival long-term truck rental and outright truck purchase. Accordingly, Jungheinrich has invested over £5 million in its short-term rental fleet over the past 12 months, boosting its fleet to over 2,000 units. Allan Parsons, short-term rental manager at Briggs Equipment, takes a different view, however. He agrees that short-term hire will increase owing to customers’ increasing need for flexibility that short-term hire can provide “but it will never rival long-term contracts because these have lower costs.” Even so, Briggs has invested over £15 million in recent years buying over 1,200 new rental machines.

Truck hirers should have no problems dealing directly with leading manufacturers like Jungheinrich, Toyota, Linde and Briggs but there are many independent dealers and as with any contract it is important to check the small print to spot the hidden costs. What may seem a cheap deal could prove a costly one and one ploy dealers may use is to levy inflated delivery charges. Another snag is that the trucks in question could be over 10 years old, which raises the risks of high maintenance and repair costs. Hirers would be well advised to ensure that the trucks have done less than 5,000 hours and that the supplier provides full maintenance and repair. Allan Parsons also cautions that it is essential to consider the type of load being handled during busy periods. “Making do with smaller trucks because they are cheaper can prove a false economy and even prove a safety risk. It’s important to have the right machine for the operation,” he says.

An extra word of caution involves buying trucks online. These have been known to be in such poor condition that they were illegal to drive. For peace of mind such purchases are probably best avoided entirely.

Simon Brown, MD of Translift Bendi, sees a long-term threat from a switch to short-term hire. He feels it would be very foolhardy. “It’s like the car hire industry over the recession which opened its doors to weekly hires at close to long-term rates. However, now the standards in this sector are showing the signs of fatigue as standards and promises slip without the long-term customer commitment.”

In a way this trend to short-term hire could be likened to the trend to ask for one-year break clauses in five-year rental contracts brought on by the pressures of an uncertain business climate. They were bad news for truck suppliers because it raised their risks significantly and hirers were, in effect, expecting one-year rentals at the cheaper five-year contract rates. Yet suppliers must recognise that as the business climate becomes more uncertain they do not want to be lumbered with unbreakable long-term contracts. They should realize that the first law of good marketing is to give the customer what the customer wants and not what the supplier thinks is best for them. For their part, hirers should accept that truck suppliers need to earn sufficient profits so they can be healthy enough to re-invest in ever-more efficient and safer trucks and that expecting long-term hire rates at what could prove a short-term hire is unrealistic.

Warehouse Logistics News

Article source: http://www.warehousenews.co.uk/2013/01/fork-trucks-short-term-hire-could-destabilise-forklift-market/