Blog: How to Acquire MHE in Uncertain Times

The year 2020 has proven to be anything but typical and my guess is the next 6-12 months will fall right in line. Between one of the most anticipated elections ever coupled with a second spike in a global pandemic means it’s anyone’s best guess as to where we will be this time next year.

With that in mind, an important decision many of our customers will have to make is trying to predict business volumes. As e-Commerce continues to explode, companies strive to manage inventory more efficiently to avoid many of the product ‘droughts’ we’ve experienced across the country earlier this year.

Adjusting to the Ups and Downs

A critical component to support business volumes is the material handling equipment (MHE) within your warehouse or distribution center. What we’ve seen over the last 6-8 months is a much more heightened focus on how this MHE is actually acquired. Traditionally, equipment is either:

• Purchased
• Leased
• Rented

Many customers that choose to purchase equipment outright generally are cash rich and do not see as much value in monthly payments or spending operating dollars on monthly rentals. Our expectation is that the number of customers who do pay cash might decrease. This will allow them to keep more cash on hand and seek more flexible alternatives to add/subtract equipment from their fleet while taking advantage of our unprecedented low interest rates. For companies that have seen a reduction in business that is not expected to bounce back anytime soon might find themselves owning too much equipment for what their operation calls for. If so, contact your supplier to see if they have interest in acquiring it.

Finding Flexibility and Balance

Leasing has long been an option for customers looking to fix their monthly payments. Whether acquired as a residual lease or a lease-to-own, both options require minimal capital upfront and spread the costs throughout the term of the lease (typically 3-5 years), factoring in a small interest rate. While this does provide flexibility to the customer, typically there are significant penalties for trying to get out of a lease early. This limits the full flexibility that would be ideal during an uncertain time like we are experiencing now. Raymond Leasing’s main goal is to help the Raymond Solutions & Support Centers around the country move more forklifts. They have proven to be a valuable asset during this time by getting creative with lowering interest rates, deferred payments, and creative payment setups to help meet the unique demands of each and every customer.

The most flexible way to acquire MHE is short- and long-term rentals. This falls right in line with what we at Abel Womack have seen which is a record rental year in 2020. When things first went haywire back in the spring, many customers came to us and rented nearly every  piece of functioning equipment we had. The great thing about rentals is there’s generally no true ‘contract’ but rather an agreement which allows return of the rentals whenever the customer chooses.

The other great thing about rentals is general maintenance is included in the monthly rate. Typically, rental forklifts are more basic, common spec’d units to service the 80% of our customers that fall within this. Specialized, custom spec’d units are typically acquired in the two lease options listed above.

Navigating the Future

With the largest forklift rental fleet in the Northeast, Abel Womack is ready to support your business no matter what the future brings! Give us a call today for all your material handling needs.