How Do You Know When to Update Your Forklift Fleet?

Blog Image - How Do You Know When to Update Your Forklift Fleet?

Experienced fleet managers know: an optimized fleet is a profitable, productive fleet. Whether you have five forklifts or fifty, there’s a sense of pride that comes with a reliable fleet that’s always humming — and contributing to the bottom line.

Unfortunately, an older fleet puts your company at a competitive disadvantage. Proactive management is key.

Want to optimize uptime and profitability? Read on and learn how to:

  • Right-size your fleet
  • Know when it’s time to upgrade  
  • Invest in new equipment without spending a lot of capital

How Do You Know When to Update Your Forklift Fleet?5 Signs You Need to Update Your Equipment Fleet

 
#1 Frequent Repairs

Your operation can’t maximize productivity without reliable equipment. If your forklift (or other equipment) has reached the point where breakdowns are no longer a surprise, it’s probably time to buy a  replacement.

An aging fleet is an avalanche of downtime waiting to happen. When an older forklift goes down, and the backup is of a similar age, your operation risks having multiple forklifts offline and a productivity crisis. 

If you get pushback about the cost of replacing equipment, remind whoever is  objecting that breakdowns cost a lot more than what’s on the repair invoice. Downtime is a massive drain on productivity and profits.

Here’s another big reason older equipment is bad for business...

#2 You've Lost Business to Competitors With Cheaper Rates

Put simply: with an older fleet, you have higher overhead and thinner margins vs. your competitors. 

Forklift manufacturers have made significant improvements to fuel efficiency in recent years, which means newer fleets spend less on fuel. Other technological improvements, such as faster lift speeds and special attachments, are another way new equipment  can give one business an advantage over another.

Some industries are switching to electric forklifts - which now perform just as well as their internal combustion counterparts. If you don’t believe it, ask us for an on-site demo

Even though electric forklifts cost more upfront, they cost significantly less to own, and you don’t have to worry about spiking fuel prices. You lock in the savings the moment you buy the forklift.

#3 Your Business Needs Have Changed

If you have a lift truck that doesn’t have enough capacity to handle your most common load sizes, it’s time to get a new one. Whenever operators have to switch forklifts or wait for a forklift to become available, that’s death by a thousand cuts. I don’t need to tell you labor is one of your biggest expenses, and time wasted is money lost.

Converting to narrow aisles is another reason to change equipment. You can get more out of your existing space and stop paying for empty air. Specialized 3-wheel and stand-up lift trucks allow your operators to move product just as quickly and easily as a traditional sit-down forklift.

#4 Over-Utilization

Generally speaking, if your forklift utilization rate is higher than 90 percent, the equipment is overworked, and it’s time to supplement your fleet by acquiring another piece of equipment or scheduling a seasonal rental. Your fleet management software can compute your precise utilization rate, but if you want a rough estimate, you can use this quick utilization rate calculator.

#5 High Maintenance Costs

Fleets that have a mish-mash of equipment from different manufacturers typically overpay for maintenance. By consolidating all your fleet into equipment from one or two manufacturers and/or one service provider, you will enjoy significant savings. Read this success story about one of our customers, Ram Tool.

How Do You Know When to Update Your Forklift Fleet? Featuring a yellow Clark forklift.

How to Upgrade Your Fleet Without Spending a Lot of Capital

At this point you may be thinking, “thanks for all the great info, John, but where am I going to get the money to buy all this new equipment?” That’s a fair question.

If you need additional equipment to meet a seasonal spike in demand, renting a forklift (or other equipment) is a good option. Renting equipment is also a good way to test out equipment you’re interested in buying.

If you need to buy multiple pieces of equipment, or you’re unsure what the next few years have in store for your business, a lease may be the best option. Some operations won't consider leasing because they have an emotional attachment to owning equipment.

Unfortunately, buying equipment outright ties up a big chunk of capital. Down the road, you may wish you had that money to spend on something else. Also, if business needs change, you can get stuck with equipment you’re no longer using.

A carefully constructed lease can give you the flexibility to add or remove equipment as business needs change and maximize your purchasing power. With a forklift lease you:  

  • Pay very little (or nothing) upfront
  • Have lower monthly payments (vs. financing a purchase)
  • Only pay for the hours you use the equipment
  • Avoid downtime and unexpected repair expenses 
  • Invest in growth opportunities instead of a depreciating asset
  • Enjoy a “young” fleet with the latest technology
  • Have the option to purchase the equipment or give it back 

Depending on the size of your fleet, a mix of owned and leased forklifts might be the best option. For example:

  • Own the equipment you need to support your core business
  • Rent equipment seasonally and/or lease equipment to weather a period of economic uncertainty

For a comprehensive overview of when to buy vs. rent vs. lease equipment, download our Ultimate Guide to Forklift Financing.

Most people don’t realize the flexibility you get with a lease. Payments can be completely tailored to business ebbs and flows and structured for 1-7 years. 

Below is a short summary of the most popular forklift leases we offer. For more detailed info, download our free guide to forklift financing, or contact one of our forklift fleet experts online or by phone at 800-238-3006.

Fair Market Value (FMV) Lease

This is the most popular type of forklift lease, probably because it has the lowest monthly payments versus buying a forklift or other lease options. The name refers to what happens at the end of the lease:  if your business wants to purchase a forklift it’s been leasing, the price will be the “fair market value.”

Flexible Term Lease

Flexible term leases combine multiple leases with different terms so your business can respond to fluid situations. At the end of the first lease term, you can choose to return the equipment or start the second term with a lower monthly payment.

One Pay Operating Lease

Choose this type of lease contract if you want to front-load expenses by making a large upfront payment. This strategy helps reduce monthly operational expenses and maintain cash flow while utilizing all the benefits of brand new equipment. 

Skip Payment Operating Lease

These contracts are structured so payments are due only when your cash flow is healthy and consistent. You can choose to skip payments during seasonal lows and pay more during months of high productivity.

Questions? Our helpful and friendly forklift experts can help you optimize your fleet and find the best forklift financing options for your operational needs and budget. During a one-on-one consultation, we’ll take the time to get to know you and your business - to understand your needs completely. Then, we’ll deliver options tailored to your business and answer any questions you may have so you can make an informed decision that meets your needs.

The Lilly Company is an authorized forklift dealer for Toyota, Clark, Linde and other leading material handling equipment brands.

Contact us online or by phone (800-238-3006) with any questions you have. Or visit us at one of our 13 locations across the Mid-South.

Arkansas - Jonesboro
Alabama - Birmingham, Dothan, Irondale, Madison, Mobile, and Montgomery
Mississippi - Tupelo and Richland
Tennessee - Jackson, Kingsport, Knoxville, and Memphis

Further Reading:
Why Outsourcing Forklift Planned Maintenance Makes Sense
How to Use Fleet Management to Reduce Total Cost of Ownership
Why This Forklift Should Be Your #1 Draft Pick

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