Chris Aiello Whose customer is it anyway
Electrification in the material handling industry, electrified equipment, and fleets, are not just ‘buzz’ words anymore as much as they are business trends within our industry. As we continue to see this increasing trend of electrification of forklift fleets across our industry, many dealers and independent service providers are embracing this as part of their business strategy. They must also understand and be educated on environmental regulatory changes that will affect our industry and adjacent industries in the years to come.
If you recall what I wrote in last month’s edition, many businesses now have dedicated departments and positions for Environmental, Social, and Governance (ESG). Some may be instituting corporate policies around environmental issues such as air pollution, greenhouse gas emissions, and compliance with government environmental regulations. For example, The California Air Resources Board wants to “accelerate the transition to zero-emission to meet the state’s air quality and greenhouse gas reduction goals. They are currently developing a measure that would drive the greater deployment of zero-emission forklifts within fleets throughout the state; one of several near-term actions intended to facilitate further zero-emission equipment penetration in the off-road sector. This measure is scheduled for Board consideration in 2023.” Keep in mind; they already passed legislation requiring all new cars sold in the state by 2035 to be free of greenhouse gas emissions such as carbon dioxide.
Just this past December, the Material Handling Industry (MHI) launched a new Industry Group, the Advanced Energy Council (AEC), focused on advanced energy solutions including lithium-ion batteries, hydrogen fuel cells, and other technologies and accessories. As stated on the MHI website, “The group’s mission is to uplift and promote the safe use and adoption of advanced energy technologies in motive material handling applications by advancing sustainable motive material handling energy solutions.”
The rental equipment industry is also embracing these regulatory impacts as they look to provide customers with higher efficiency, lower emission, and alternatively fueled rental equipment. In particular, with their MEWP rental fleets, many of the MEWP OEMs have introduced fully electric models, as well as incorporating lithium-ion battery technology too. The end-customer they rent to, particularly on job sites, must adhere to stricter emission and noise standards.
So what does this all mean to the sales of aftermarket parts and service for forklifts? Well, in general, electric forklifts tend to last longer than internal combustion trucks because they have fewer parts. Having fewer replaceable parts, means fewer service and maintenance requirements, translating to fewer service and parts dollars available to capture for the lift truck service provider. Enter the additional ‘solution’ to the full-solutions provider lift truck dealership. Optimizing forklift battery management is a value-added service to the end customer that dealerships are recognizing as another revenue stream.
In the traditional model, the dealership sells the truck to the end customer and the battery agent sells the battery through the dealership. This raises the question, who owns the customer relationship and the customer experience? Furthermore, who owns the forklift battery management after the sale of the new or used forklift? As I have stated previously, modern lift truck dealership and independent service provider has evolved as they look to be a full solutions provider for all of the needs of their customers. Adding sales and service of everything in the warehouse, including forklifts, personnel burden carriers, sweeper scrubber equipment, racking, dock and door, warehouse management systems, etc. Promoting the ‘one-stop shop’ full-service offering and delivering outstanding customer service, the forklift battery management is now being considered an addition to that same ‘one-stop shop’ offering.
Today, battery manufacturers are sometimes more than just a manufacturer; they also provide after-sales support to their dealers for the forklift batteries, chargers, and accessories that they produce. Many of these battery manufacturers have existing strategic partnerships with OEMs. The rise of lithium-ion battery manufacturers has also led to an increase in strategic partnerships with said manufacturers and OEMs.
Over the past few years, many dealerships have started to acquire forklift battery agent businesses or ventured on their own to provide full forklift battery solutions for their customers. Solutions include industrial chargers, battery maintenance, used and reconditioned batteries, battery and charger rentals, and battery parts and accessories. This is a trend that I feel will continue to be on the rise. This trend will put the battery agents and the OEM dealers in an interesting situation. As with the sale of a lift truck, the recurring revenue is in the parts and service after the sale of the lift truck as is the same for the sale of a forklift battery, there is more money in the service.
The threat to the traditional OEM-Dealership model is the third-party service provider as they have already shifted their business strategies to attempt to capture a competitive advantage in the market. As with dealerships, the third-party service providers have also started racking up acquisitions in the full-service forklift battery management space.
If the trend in automotive does mirror itself into the off-road equipment sector such as the forklift industry, what will the impact be on your business and your market? Everything from the diagnostics to the parts consumption are factors that will have an impact on your service departments. The revenue in the sale and service of forklift batteries while maintaining and monitoring them for consistent, reliable performance and long service life is the value to the end customer regardless of who provides the battery service as it is a crucial part of the uptime of their electric forklift fleet. The question is who owns this customer and the customer experience?
About the Author:
Chris Aiello is the Business Development Manager at TVH Parts Co. He has been in the equipment business for 16-plus years as a service manager, quality assurance manager, and business development manager. Chris now manages a national outside sales team selling replacement parts and accessories in various equipment markets such as material handling, equipment rental, and construction/earthmoving dealerships.
