Like any other capital equipment market, the forklift rental market has simultaneously seen exponential growth and sweeping changes in recent years. But, the major question remains, to rent or to buy? Who to rent from? Let’s also explore some of the new realities in the industry, like the changing clientele, shifting customer needs and sophisticated equipment, among others.
To begin with, the major thing end users normally grapple with whenever forklift acquisition decisions arise is when should they buy or rent? What are the main considerations that one needs to look at before making the big decision? In deciding whether to purchase or rent a forklift, the first major consideration is expense-based and includes three separate arms.
Firstly, is the capex available for the purchase of a new unit? Rental offers a far lower upfront cost compared with the outright purchase of a new unit. In addition, a rental can be written off as an operational expense, and is generally far easier to deal with than the depreciation costs that come with a purchased asset. Often buying machinery has an appeal as it is a once off expense and could be considered a long-term investment. However, owning equipment also means that the equipment now forms part of the company’s assets and it would carry depreciation costs.
Secondly, consider where money is best tied in the case of a company that may not have the credit available to purchase new equipment. Thirdly, in terms of budgeting, a rental is far easier to forecast expenses than any unexpected repairs that may be needed during the lifecycle of an owned unit. The rental option also offers back up machines in case of breakdowns to ensure that productivity is not affected while the machine goes for repair. The rental option also offers an easy upgrade or downgrade path without additional capital outlay when compared with outright purchasing.
Rental rates, size of operation, timeliness and tax considerations are just some of the factors that are important in determining which option is the preferred investment choice. However, I should reiterate that it is of utmost significance to note that there is no right or wrong in these two options, they just suit different businesses at different times. Because no option is always the best, careful consideration and analysis of each alternative must be given, depending on each user’s needs.
Apart from the buying or renting dilemma, it is also important to note that the forklift rental market has significantly evolved over the past few years. With the focus on environmental safety and the ‘go green’ movement, the forklift industry has seen a major shift from internal combustion units to electric-driven forklifts. The result has been detailed improvements in the efficiencies of electric forklifts – from expanding diversities on batteries to the growing need to supply units that can handle two or more shifts in one charging cycle.
There has also been a shift in the type of offerings available to customers, and I should say that traditional classifications of material handling equipment are growing to include specialised units made specifically for the changing demands of customers. A good example of this would be the WAV unit that offers clients a hybrid between an order picker and platform unit to give them an opportunity to work within confined spaces, while still allowing for individualised picking.
From a supplier point of view, change in clientele has also been one of the major trends in the forklift rental market in recent years. Industries are dynamic and are constantly changing. Companies are moving away from the standard industrial setting into complete warehouse solutions that can house production, storage and logistics. These could be done both in-house or through a third-party supplier. These changes have allowed us to touch a far wider range and scope of clients looking to change the manner in which they operate.
Due to our quick adaptation to these new realities, I should say the growth of our rental side of the business has been phenomenal, particularly last year. We are continually growing the rental fleet and seem to be having it right. Better response times from the Shumani team and the growth in the reputation of Shumani in the market are key reasons behind this growth. Shumani has been able to consistently provide 98% uptime and as word grows in the market about the service levels, there is a growing need for Shumani services in the market.
In terms of equipment, there is need for rental companies to regularly update their fleets as new technology becomes available. Shumani sells and rents out reputable forklift brands that are leading names in their respective markets, not only in South Africa but around the world. In Doosan, Crown and Bend, among others, we have access to some of the most advanced forklift products.
As jobs are changing, presenting a new sets of applications which require new solutions to undertake them, there is a need for rental companies to offer application-specific equipment. I believe material handling will always be application specific. But beyond just offering the best solution to a client in terms of what their needs are, Shumani is able to offer a complete solution, all the way from material handling to increasing productivities by offering other complementary products within our portfolio, such as generators, cleaning equipment and compressors.
This allows customers to deal with one supplier that fully understands the warehouse needs and offer a solution completely tailor made. This is what sets us apart from the rest of the rental companies – our holistic view on the warehouse function.