In India, seven forklifts are sold per one million inhabitants, whereas the global average is more than 140 a clear indication of the enormous demand potential for forklifts in the Indian market.
Substantial growth in organized retail, advent and rise of e-commerce, boost to manufacturing, renewed outlook and investments on warehousing and logistics, availability and adaptation of IT systems (WMS) and most importantly, GST implementation will fuel the demand for forklifts.
85-90% of the forklift market is light forklifts in the range of 1.5T to 3.5T, says, Sunil K Gupta, CEO & Managing Director, KION India. According to him there is huge growth potential in the Indian MHE market which is expected to continuously grow by 9-10% YOY in the coming years.
“The Indian forklift market is expecting a CAGR of 10-12% in the coming years,” states Rahul Sagar, Assistant General Manager, Marketing, Maini Materials Movement. According to him India being a developing economy is sure to witness a rise in manufacturing and thus the market of forklifts in the coming years.
According to Sunil Gupta the biggest growth driver is increase in industrial production followed by strengthening of logistics infrastructure. He states, “GST implementation will be a major boost to the industry as after its implementation, warehousing scenario in India will shift from ‘Tax efficient’ to ‘Operational efficient’ resulting into technology and demand increase for material handling equipment. Government’s focus on manufacturing is pushing growth.”
For Chetan Gole, Vice President, Action Construction Equipment the hiring segment is the major demand puller. “Almost all Industrial segments like automobile, chemical, fertilizer, pharma, glass, steel, ferro-alloys, rubber etc., are extensively using forklifts for their material handling needs. However in current scenario where most of the industries are off-loading their material handling needs to hiring contractor to avoid heavy investment and maintenance hassles hence in the current scenario the hiring segment is a major driver of demand in the industry. With ever increasing international business i.e. import & export, Indian port infrastructure is poised for steady growth and this will be a major driver for heavy duty forklifts and associated equipment like container handlers in India. Steel industries will also contribute to the growth prospects for heavy duty forklift in India.”
Sagar says, “Since the labor cost has still not gone that up in India as compared to the developed economies, the forklifts are generally employed for medium and heavy duty applications. The country is primarily using diesel forklift trucks for all type of operations. Hence diesel forklifts occupy a larger share of the Indian market in comparison to the electric ones. With new environmental norms coming in, the market is gradually shifting towards electric forklifts now.”
Logistics to Fuel the Demand
According to Hitesh Gupta, Vice President, Praguna there is a long way to go. He says, “Compared to the developed markets, we are still far behind as far as standardization of logistics infrastructure is concerned. This problem is a tough nut to crack given the fact that a big chunk of the logistics industry is fragmented and unorganized. As a result, it becomes difficult to enforce containerization and palletization in the Indian context.” He adds, “But on the brighter side, things are changing and with standardization of logistics infrastructure, forklifts usage will definitely increase. Implementation of GST will help accelerate this.” Praguna, accredited by RTITB, UK offers training for forklift operators.
With the increase in cargo traffic and overall space crunch, efficiency has become a major factor in determining business growth and profitability. According to Sunil Gupta huge spending on ports infrastructure and a surge in e-commerce are among factors that are leading to an increase in containerization and palletisation. This is a positive trend for the MHE industry.
Says Manojit Acharya, Managing Director, Jugheninrich Lift Trucks India, “Without containerisation and palletisation, logistics industry will not be efficient and will not grow. India is moving towards palletisation which indicates the growth of our industries in India. From the last three years the logistics industry has widely spread all across India and now they are ready to carry out better movement of material with the help of Material handling equipment.”
Warehouse Industry Trends
Highlighting the trends in warehouse industry Acharya had this to say. “Automated warehouse is increasing in India but not as per expectation. Back up service required for automated warehouse in India is limited. But the trend will increase in coming future. Awareness’ of IT based warehouse management solution is increasing and we will see more warehouses operated with warehouse management system. Demand for software based solutions is increasing day by day. Warehouse operation management is not easy in India and we are still at learning phase.”
“With the Make in India campaign sweeping in and GST implementation round the corner, the manufacturing sector is expecting a boom in the coming years. With this will grow the warehouse industry as well. To optimize warehousing operations, employment of best in class material handling equipment is a must along with right racking systems. Efficient material handling equipment helps save time and makes operations productive. Thus with the growth of warehousing industry we see good prospects for the forklift market as well,” says Sagar.
Hitesh explains, ‘GST will eliminate the need of having warehouse in each state to avoid CST, thereby encouraging corporation to set up fewer, larger and more sophisticated warehouses. All this will bring a sea change in the way warehousing is done in India. To cater to the changes that we will experience in the near future, we need to be equipped with bigger and better workforce that will be able to handle the complexities of equipment and IT systems that will come into force.”
Rental – on a Splendid Growth Path
According to studies undertaken by Praguna, rental will constitute of 30-40% of the MHE market in the next five years. Hitesh Gupta says, “Rental forklift market is growing at a spectacular rate. Earlier the rental market was mostly dominated by small players; who used their fleets to meet peak loads in various capacities. But the scenario is changing quickly, majority of the OEMs have now entered in this market and are now providing rental services along with a bunch of value added services; including operators, maintenance and fleet management.”
Sunil Gupta of KION is on the same page. According to him rental MHE market is expected to grow faster in coming years. Hiring of equipment is beneficial to customers who are dealing with short term projects with changing requirements. Companies will opt for fleet management services for a comprehensive solution to their business needs avoiding in-house maintenance hassles. Leasing is beneficial for customers in terms of cash flow and faster tax benefit. Also, customers are less prone to market volatility with leasing as compared to buying. But, still lot of standardization is required in the rental segment to make it more attractive to the consumer.
Says Gole, “We have seen increasing shift towards rental fleet users. Customers, especially fleet users, like to off-load logistics/ material handling activity to rental machine providers. This arrangement saves them from huge capital investment, day to day operations and maintenance issues. We see a huge potential in this segment in the coming time. We already have a fleet of machine for rental business.”
Gole also points out some of the challenges in the rental segment. According to him the current structure of different sales tax, octrai , entry tax etc. in different states puts the manufacturers at disadvantage and does not offer a level playing field. A uniform tax structure would help improve the scenario.”
Product & Technology Trends
Indian forklifts market has seen a sea-change in product and technology trends in the last couple of years. Most of the international players have started setting up their base in India which has resulted into availability of new product design and latest technologies. Today products are offered with focus on operator comfort, safety and ultimate productivity in mind. Products are designed to be more reliable, efficient and service friendly. Says Gole, “Indian customers have realized the importance of cycle efficiency, safety and wastage reduction, resulting into more of palletisation and mechanized handling. This will certainly boost the demand scenario of forklifts in India.”
Sunil Gupta states, “Demand for E and WHE has risen up significantly while IC market remains stagnant. There has been a shift towards battery operated forklift trucks due to their environment friendliness. But, they cannot replace IC machines which have their own advantage in rugged outdoor applications. Also, there has been a push towards manufacturing of more efficient and safe equipment.”
According to Sagar the forklift industry is moving towards cleaner trends. People now prefer electric over diesel because of its lower total cost of ownership. Forklift has no longer remained a massive machine made for a single purpose; they are now going through various customizations. They are available with many special attachments for specific applications.
On Board Technology
The Masterbuilder tried to find out the scope for on-board technology in India. According to Hitesh Gupta “There is always a scope for on-board technologies, be it in India or elsewhere. He avers, “The investment associated with emerging technologies is always going to be higher and unless we in India start thinking long-term, we will find adoption of these technologies to be slower than what’s needed. Additionally, skilled and trained work-force to run these technologies is also a dampening factor.” Acharya is also on the same page. According to him material handling equipment operator should be well educated and trained for the efficient way of using the equipment which will indirectly help for incorporating on-board diagnostics and remote control repairing in India.
Challenges in Training
Historically, vocational skills with respect to logistics sector have largely been ignored leading to a serious gap between the demand and supply of skilled lift truck operators in the country. The problem looks all the more daunting with the increased adaptation of MHEs in the Indian logistics environment. Usually, it is the same crop of operators that gets rotated between different facilities. Hitesh Gupta states, “A Training should not be considered as a cost but an investment. Once this is accepted, people will start realizing the benefits that a trained operator can bring to the table, not only from the perspective of safe and efficient operations but also from equipment maintenance and uptime’s point of view.”
Hitesh also sheds light on the impact of fast changing product and technology trends in the forklift market on the logistics sector. According him logistics sector has historically been underinvested and hasn’t truly experienced the technology growth that other industries have seen. However, Hitesh points out, “This trend is changing fast. Most of it is driven by the realization that sometimes success and failure are just separated by an efficient supply chain. Therefore, this industry is experiencing a surge in technology that is unforeseen and the impact is there to be seen in the MHEs as well. MHEs now are getting intelligent and more advanced than ever; capable of doing much more than just moving the objects. IOT and the various technologies associated with it will make lift trucks more than what they are. These trends warrant new operators to be properly skilled and also make a case for the upgradation of skills of the existing operators.
According to Gupta of KION import of forklifts brings competition for the local manufacturers on technology as well as price side. Chinese brands are able to provide cheaper products. European and Japanese manufacturers bring in good technology while also benefiting on price through high sea sales. Still, local manufacturers have been able to stay strong in the market by providing value for money products and backing them up with efficient service network.
With a tremendous growth already visible the industry in Q1 2016 over Q1 2015 the industry is confident of a huge growth in the coming years. According to Sunil Gupta E and WHE segments are growing at a tremendous pace with more than 25% growth.