How digital disruption is influencing the forklift rental market
Sales Management Director | Jungheinrich UK
Digital disruptors are influencing every aspect of business in every vertical, whether it’s shaping growth, inspiring change or prompting new business models, the digital world is one that shows no signs of slowing. The implications for all sectors are significant and the logistics and materials handling market is no different.
In particular, some recent research undertaken by Jungheinrich UK Ltd, in conjunction with Sapio Research, into the forklift truck market, highlighted the desire for digital change even further, especially within the short term rental market. The research uncovered that existing patterns of acquisition are beginning to look dated and there is evidence that short term rental (STR) is being considered as an alternative to traditional three to five year contracts. So what does this mean for the industry?
From speed of delivery to innovative pricing models, it is apparent that the forklift rental market needs to evolve and offer the flexibility demanded by organisations responding to the challenges of a 24x7 marketplace.
· Almost two thirds (61%) agreed that the 9-5 approach to short term rental (STR) is out of sync with today’s 24x7 demand.
· 51% agree they could benefit from quicker delivery of hired forklifts.
· 25% agree that the options currently available are mostly outdated compared to other rental markets.
But what now?
There is no doubt that organisations are beginning to rethink the way rental can be used both tactically and strategically - providing both short term cover to manage volatility and supplementing fleets for a longer term. However, it is also clear that the materials handling market has lagged behind when it comes to responding to these new demands. According to the research, almost two thirds (61%) agree that the nine to five approach to equipment hire is out of sync with today’s 24x7 demand – and a quarter of respondents feel that the truck rental market is outdated compared to other rental markets.
Organisations need to support the new pace of operations and demand patterns that are putting pressure on lead times; and they also need additional flexibility built in to the business model. As a result companies are asking for faster access to equipment. In addition, they want more innovation in the rental model to support the different requirements, from complementing existing truck acquisition models to responding to peaks in demand.
With rental now seen as a compelling solution to address a diverse range of business challenges, the research reveals not only a strong interest in the idea of a Daily Rental option but also evidence that rental is being considered as an alternative to traditional three to five year contracts. While materials handling vendors can clearly rejig financing options to support the use of rental equipment as an alternative to traditional acquisition concepts, how will the market gear up to the need for a fast, flexible and responsive 24/7 service that can support organisations’ changing warehouse/logistics requirements?
A demand for OnDemand
One of the most significant findings of the survey was the strong interest (76%) in a rental model predicated on truck usage – based on telematics data – rather than a fixed term agreement. Such confidence in telematics data reinforces the way organisations are increasingly exploring technology to drive innovation in so many areas, including the Internet of Things (IoT) – why should equipment rental be any different?
The research also highlighted how companies have rising expectations when it comes to speed of delivery - not dissimilar to consumer demand. With over half agreeing they could benefit from quicker delivery of hired forklifts, there is strong demand for faster access to trucks to manage demand volatility. The standard seven day wait in place across the materials handling market does not offer the required speed of response.
Technology innovation is key to meeting this new expectation for faster delivery, on demand usage and 24x7 operations and the use of Telematics also opens up new rental systems with the option to charge by the hour, offering a highly flexible approach to rental in the UK.
In addition, the adoption of IoT increasingly enables every aspect of the supply chain to be recorded, analysed and adjusted in real-time, with a growing expectation that equipment vendors can also deliver vital data to support compliance, warehouse and logistics systems.
In conclusion, the research provided a really interesting insight into the significant shift in mindset of the the way rented equipment is considered and utilised – and how the onus is now on materials handling equipment manufacturers to take the lead. There is no doubt that organisations are requiring business models that allow for the agility, flexibility and improved cost visibility that they need within their business. And if manufacturers can combine this desire with technology and proven, high quality and consistent equipment, then the hire service and mentality will be in an increasingly significant place for change.
Posted on: May 8th 2018