YOUNGSTOWN, Ohio – Companies engaged in materials handling are among the most important links in supply chains and logistics networks – both of which are under strain in today’s unusual economy.
Yet the market hasn’t adversely affected business for those who lease or sell lift equipment, conveyance systems and other products that ground-floor operations rely on to move products from one destination to another. Indeed, for many of these companies, business has never been better.
“I’ve been doing this for 34 years and have never seen anything like this,” says Carl Stitzel, president of DEL Lift Rentals & Sales and Direct Forklift & Equipment in Boardman. “We have so much demand right now, even in the local economy.”
DEL rents and sells equipment such as forklifts, scissor lifts and boom lifts to companies engaged in construction, warehousing and distribution, and manufacturing, Stitzel says. Direct Forklift sells reconditioned and new lift products, as well as equipment for the construction industry and miscellaneous materials handling products.
Stitzel says that companies are finding it difficult to secure new lift equipment from manufacturers because of clogs in the supply chain. That’s caused longer lead times that are months out. Businesses that need equipment now can’t afford to wait that long, he says.
“Recently, a rental company from Columbus called so they could rent from us, then rent to their customers,” Stitzel says. “That’s how bad it’s gotten with the supply chain. They had no inventory.”
Fortunately, DEL managed to stock its inventory with new equipment before the supply crunch hit, Stitzel says. “We anticipated this and geared up our inventory. The local rental company is busier than ever right now.”
Because of supply constraints, many companies have opted to lease or rent equipment, Stitzel says.
Higher transportation costs have nevertheless affected Stitzel’s other operation, Direct Forklift, he says. Direct Forklift purchases lift equipment that comes off lease and then reconditions and resells it to customers throughout North America.
“I’d say 95% of our business is outside the local market and done all over North America,” he says. “We’re selling everything before it’s unloaded.”
One drawback is that the equipment is first transported to Direct Forklift’s Boardman location, then to the customer, Stitzel says. “Freight and logistics costs on the West Coast are killing us.”
One solution under consideration is to lease a warehouse on the West Coast to serve that segment of the market. “It’s cheaper right now to rent or lease warehouse space than it is to ship freight to Ohio,” Stitzel says
Others in the materials handling industry have noticed some customers hitting the pause button on projects in the face of higher prices and supply issues.
“Some want to wait and see what next year is going to be like,” says Bill Petro, president of Century-Fournier in Boardman. The company supplies materials handling products such as loading dock equipment, conveyance systems, and lift equipment.
Nevertheless, Petro says the number of quotes he receives is very strong at the moment, despite an economy hit with parts shortages and higher materials and fuel costs.
“In spite of everything, I’m optimistic,” he says. “We’re doing very well.”
Century-Fournier’s equipment is used across a broad spectrum of industries, including construction, manufacturing, institutions, warehousing – any business that requires the need for durable goods, Petro says. “We supply the engineered and pre-engineered materials handling products that help people accomplish their work in their plants,” he says. “That covers a wide range. We’re not a forklift company. But we do just about everything else related to plant facilities, equipment and providing service for that equipment.”
The greatest challenge customers face, according to Petro, is that it’s harder to plan projects because of supply constraints.
“The lead times on components and completed equipment have gone way out,” he says. Lead times for parts or systems that were once four to six weeks out are today stretched to between five and nine months.
There’s still plenty of opportunity in the market, Petro says, especially for those companies that have a strong reputation across the industry. Lately, he observes that the company is receiving more quotes and business outside of its traditional geographic service area in northeastern Ohio, northwestern Pennsylvania and the panhandle of West Virginia.
“It’s a little unusual,” Petro says. “But if someone hears about you and if you have a good reputation, you get invited for other work. So that’s helped us as well.”
Demand for materials handling products has skyrocketed across northeastern Ohio, says Jim Hammond, president of Valley Industrial Trucks, a forklift and lift dealer that has sites in Boardman and Akron.
“Nuts is what it is,” Hammond says with a laugh.
Hammond reports demand for lift trucks across the industry in the local marketplace exploded by 75% during 2021. This year, demand is trending even higher.
“The local market should see an increase of 10% to 15% over 2021,” he projects.
As a result, Hammond reports that demand has led to “record numbers” at Valley Industrial, without divulging precise sales figures. “We continue to see the business being strong. There are no signs of a slowdown yet.”
The materials handling business, Hammond says, is often a lagging indicator of the state of the economy. But as of now, major customers in steel, aluminum and plastics, for example, remain very busy. “When our customers are not busy, there’s a problem. We’re not seeing that.”
About 80% of Valley Industrial’s business is through lease agreements versus sales, Hammond says.
Since some lead times for new lift trucks have stretched into next year, more customers are looking at extending their lease agreements, he says. Or, other customers are repairing old equipment to keep it running longer, which has helped sales at Valley Industrial’s parts and service departments.
“Every facet of our business is on the increase,” Hammond says.
High demand, however, has also placed stressors in other areas of the materials handling market.
“Today, shortages in labor, raw material, and finished goods continue to haunt manufacturers and consumers,” says Gary Sharon, executive vice president at Litco International Inc., based in Vienna. “Demand remains strong. But these shortages are contributing to long lead times.”
Litco manufactures engineered pallets that are molded from pre-and post-industrial wood waste that otherwise would have gone into a landfill. The company’s pallets are manufactured in the United States at plants in Ohio and Mississippi.
Sharon says the shutdowns during COVID-19 forced a shift in consumer demand from services to durable goods, thereby increasing demand for raw materials, packaging and pallets. Meanwhile, earlier this year, a large pallet distributor curtailed production, creating significant supply shortages.
“Pallet manufacturers have tried to increase output but material and labor shortages are making it difficult,” he says. As such, prices for traditional wooden pallets have spiked, opening up opportunities for companies such as Litco to gain market share.
“Because of increasing prices and longer lead times for these types of pallets,” he says, “buyers are more likely to consider alternate materials and designs, such as our engineered molded wood pallets.”
Sharon adds that Litco has observed greater interest from companies that are considering purchasing these types of pallets because they fit corporate environmental, social and governance goals. “Litco has been at the forefront of the sustainability movement before it was popular,” he says.
The shortage of pallets has served as a wake up call to both customers and suppliers industrywide, according to Sharon.
“I believe the current pallet shortage has made both users and suppliers realize the high value and importance of the pallet in the supply chain,” Sharon says. “I do not expect pallet availability to return to the previous way of doing business for an exceedingly long time. If ever.”