After decades in which your forklift fleet costs have been steady and manageable, this current inflationary environment is creating a unique set of challenges, and a few opportunities.

The post-COVID pent up demand coincided with the worst supply chain shock we can remember, causing an out of balance supply: demand scenario and high inflation. Combining that dynamic with the generational shift away from physical labor and you get higher materials costs, higher labor costs, higher transportation costs and, yet still, too little of each to meet demand. In the lift truck industry, this has resulted in much higher prices and the longest lead times ever.

As lift truck manufacturers are being forced to employ a drumbeat of price increases and while lead times continue to deteriorate, forward thinking companies pulled forward their orders to meet their needs two years down the road- not to mention getting in before the next series of price increases. This has created a chicken and egg scenario in which lead times can’t normalize due to so much of 2023-2025 business being entered now, overwhelming capacity. Yet, as long as lead times stay where they are, companies will be forced to continue getting years out in front; it’s become a real conundrum. As hard as it is to say, normalization will likely only occur as a result of a slow down or recession- something we may see in the next 18 months or so.

Maximum Performance and Savings with Full Maintenance

So, where’s the opportunity? I think one oasis in fleet management is to move toward full maintenance agreements (long term fixed price maintenance agreements). Here’s why:

Just like everything else, technician labor costs are rising steeply, causing labor rates to accelerate. And as long as component inflation exists, parts prices will beat to the same drum. So, the only way to prevent your fleet maintenance costs from exploding is to lock in your maintenance costs now for the next 3-5 years. In doing so, you get to hedge against inflation by locking in monthly maintenance costs- not to mention the joy of receiving one invoice per month instead of the thousands per year that require your review.

On top of that, customers that contract for full maintenance get preferred treatment, ensuring the best response times and overall care in an environment in which there just aren’t enough technicians to go around. This higher level of care should result in your fleet lasting longer, postponing the need for replacement until we make our way back to normalized prices and lead times.

But what’s the catch. Many customers think fixed maintenance must have a catch as it just seems too good to be true. Well, the fact is that maintenance providers will sacrifice margin for a steady annuity of revenue and for the opportunity to build a long-term customer relationship. So, the provider is satisfied with the arrangement and the customer wins by locking in prices, simplifying their lives through consolidated invoicing, and getting the best support the dealer can provide; the proverbial win-win.

So, think about full maintenance in this crazy environment. It’s one of the few ways you can turn a difficult time into a plus. If you would like more information on full maintenance agreements, contact us today.