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Financing sustainability in the materials handling sector

The materials handling (MH) sector is experiencing massive growth, with global demand for MH equipment set to rise by 5.3% per year and reach $176 billion by 2020. A large part of this growth is down to the rise of e-commerce which, while proving profitable for the sector, also comes with significant logistical challenges.

Consumers now expect next-day delivery at the very least and with services such as Amazon Prime Now, a one-hour turnaround time is becoming more and more common. This is effectively reducing the amount of stock held in store and spreading it along the supply chain. These market pressures call for more warehouse equipment – which can be a prohibitive upfront cost for many businesses.

With this growth also comes an increased need for MH businesses to adopt sustainable practices and technologies. The MH sector is a vital part of our economy, enabling the efficient flow of goods along the supply chain. As such, environmentally friendly products and practices are becoming increasingly important, and there is a growing commitment to sustainability across the sector. It’s important that the industry takes responsibility for its own sustainability and evaluates the impact it’s making on the environment. Energy efficient equipment is not only good for the environment but can also be more cost-effective.

Save the planet – and save money

Access to new environmentally friendly technologies can help businesses reduce their operating costs, as well as their carbon footprint. Manufacturers are now developing products and equipment with recyclability in mind. Alternative power technologies such as electric batteries consume less energy and power equipment such as zero-emission electric lift trucks. Fuel efficiency is also a focus and manufacturers are producing models of forklift or order picking trucks that need less fuel and thus produce fewer carbon emissions.

The Internet of Things (IoT) is also helping businesses improve their fleet management systems. The IoT helps to identify potential problems with equipment which can then be remedied in advance, keeping equipment running smoothly and efficiently and saving downtime and inefficient use of labour.

The focus today is on achieving both financial and environmental sustainability. It’s time to replace older, inefficient, energy-guzzling assets. If materials handling companies can’t expand their fleets or upgrade their equipment, they’ll be at a competitive disadvantage.

Lease rather than own

A perfectly ‘circular’ economy could be the solution to our environmental problems. This concept goes beyond recycling, which requires energy intensive processes, and focuses on eliminating waste production in our industrial system. It would also involve a shift in the relationship people have with products: Consumers will become users and choose access over outright ownership. Companies therefore retain ownership and can ensure that products such as MH equipment are disposed of responsibly at the end of their lifespan.

MH equipment end-users can also benefit from the circular economy by leasing the assets they need, for as long as they need them, at a reasonable cost. The latest, environmentally friendly technologies will thus be much more easily accessible. A finance product such as contract hire even rolls up maintenance costs into the rental payments. Equipment that is regularly serviced and kept in good condition will consume far less energy, last longer, and be more sustainable to run.

Ultimately, warehouse and logistics businesses want to improve efficiency and manage their cash flow. Enabling businesses to invest in the latest environmentally friendly technology, which supports their business needs without costing them a fortune, is a sustainable solution to a changing global economy.

If you’d like to find out more about how to help your customers finance new, more environmentally friendly technologies, get in touch with us today.

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Suhale Vorajee
Head of Marketing and Communications
BNP Paribas Leasing Solutions UK

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