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Materials Handling – A Changing Market

Data available from the British Industrial Truck Association (BITA) and the Finance and Leasing Association (FLA) does not suggest a significant increase in the number of new trucks sold in the UK over the last few years. Historically, sales have tended to reflect the overall growth position of the wider economy.

Counterbalanced trucks account for nearly half of all new sales. But there has been an increasing share of sales taken by warehouse pedestrian trucks, reflecting how the rapid growth in internet shopping has led to an increase in the number of warehouses being built.

Manufacturers and their customers have rightly given additional focus to Total Cost of Ownership (TCO), to decide when and how to replace machines. Whilst the cost of a machine is an important element within any TCO analysis, it is by no means the only consideration. The cost of fuel, maintenance and personnel are fairly easily identifiable and key components within a total cost of ownership but less obvious factors affecting downtime need proper consideration. These include battery charge times, distance from a fuel source and driver skill. Proper analysis should also include an assessment of non-contract damage cost and a potential requirement for additional operators. Telematics and data analysis are being increasingly used to monitor hidden costs and make them more predictable.

A renewed focus on TCO has revealed the importance of fuel in the overall cost of running a machine, and advances in battery technology have helped to provide a method of reducing fuel costs when compared to the internal combustion alternative. Battery power now has a market share of about 70% but there remains doubt as to which battery technology, if any, will become an industry standard. It is the case that lithium ion batteries come in many forms each producing different results in terms of:

  • Initial cost
  • Specific energy (capacity)
  • Weight
  • Maintenance
  • Thermal stability (safety)
  • Charge time

A further development that manufacturers are starting to address is meeting the increasing demand for self-driving machines, operating in highly automated warehouses. The online grocery retailer Ocado offers an excellent example of how robots can complement humans to provide a highly efficient warehousing and logistical solution.

The need to address issues raised within a TCO analysis with a focus on increasing productivity, by taking advantage of the raft of new technology, involves operators having to acquire new machines. The good news is that leasing allows this type of investment to take place now whilst spreading the cost, in this way the equipment gives a much faster return on investment than with a cash purchase. HMRC also allows the cost of leasing to be offset against tax.

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Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

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