Press Release Archive

19 JANUARY 2010

Cheap trucks: an expensive option

These views were recently printed in the National Handling magazine and Uplift magazine produced by the FLTA and are supported by all at United Forktrucks.

Petrol stations… supermarkets… DIY stores… Garden centres… Everywhere you look it seems that prices are on the rise. Everywhere but the fork lift truck industry it seems, where contract hire prices are actually lower now than they were 20 years ago.

Back in 1989 a pint of milk cost just 21p, petrol was priced at 40p a litre.  48p would buy a loaf of bread while a pint of beer at your local cost just 99p. Over the past two decades the prices for these everyday items have doubled – or more.

This isn’t the case in the materials handling world, however, where prices have dropped significantly. A July 2009 survey conducted by the Association found that:

• Average weekly hire prices in 2009 are 17.8 per cent lower than they were in 1989 before adjustments for inflation;
• The weekly hire rate for a reach truck has dropped from £142 to just £114. In real terms, that’s less than half price.
• A 2.0 tonne electric counterbalance truck would have cost £107 per week back in 1989 – or £191 in today’s money. But despite 20 years of economic growth, it now costs just £93.

As truck renters will understand, these cut-price deals are unrealistically and unsustainably low. This downward pricing trend bears no relation to the exponential rise of costs, including wages and fuel, incurred running a service support operation. Nevertheless, in the recession, fork lift truck rental firms find that they are forced into bidding-war spirals against each other, in order to procure the services of market-wise consumers.

Continued heavy discounting may lure customers but it has the potential to damage the industry’s safety and service standards. In a buyer’s marketplace where the customer is king, it would hardly be surprising if a few dealers had started to cut corners simply to keep their businesses afloat.

At the Fork Lift Truck Association we are particularly concerned about the levels of truck usage deemed ‘normal’ for pricing and servicing within contract and lease hire arrangements.

To keep related costs low, it is commonly assumed that 40 hours per week represents a single shift. However this equates to more than 2000 operating hours per year and actually represents intensive usage putting significant strain on truck components and suppliers alike.

By comparison, a similar level of usage in a contract rental car, even at an average speed of just 30 mph would give an annual mileage in excess of 62,000 miles. Such usage would be viewed as extreme, incurring a penalty and requiring a service every two to three months. Indeed it is not uncommon for HGVs to be serviced on a monthly basis.

In view of this, it does not seem unreasonable to consider 40 hours per week as extended hours for a fork lift truck or perhaps even a double shift.

Moreover, ensuring adequate servicing levels is vital. The recession has led some fork lift truck users to cut their level of preventative maintenance by as much as 50 per cent. With fork lift trucks already under strain and given the intensive workload demands placed on them, taking such drastic action could place a customer at risk of falling foul of the law.

Under the Provision and Use of Work Equipment Regulations (PUWER 98), a fork lift truck user has a legal duty to ensure that a fork lift truck is always in good repair. The Association advises that, as a minimum, any fork lift truck should be subjected to:

• A sound system of daily or pre-shift checks
• A regular schedule of preventative maintenance which meets the manufacturer’s recommendations.

Finding the best deals

It is important for fork lift truck users and dealers to get the contract right. Dealers who cannot turn a profit will go out of business, with all the disruption that may cause. Worse still, there may be a temptation to cut corners with safety and servicing in order to try and make ends meet.

If dealers are to create a situation in which they can charge sustainable and reasonable prices, they will have to inform users as to the knock-on effects of not doing so, and thereby create a level of trust. They need to explain to users that the cheapest deals aren’t necessarily the best value. A significantly reduced price could indicate a significantly reduced level of service provision and, in turn, leave safety compromised. After all, if a deal looks too good to be true, it probably is.