Introduction of GST, more focus on palletisation, and expected opening up of retail segment are expected to boost the demand for forklifts.
If numbers can be believed, this is it: In India, seven forklifts are sold per one million inhabitants, whereas the global average is more than 140 - a clear indication of the enormous potential of the Indian market. No wonder, many foreign manufacturers are already aware of this potential and are setting up their business operations in India to develop strong foothold before material handling equipment (MHE) market shows multifold growth. They are supplying cost-effective, efficient forklifts, firing up the competition.
Says Sunil K Gupta, Managing Director & CEO, KION India, "Globally MHE market has consistently outgrown GDP growth rate. Considering the current level of low penetration in India, market here is expected to grow multifold. The expected CAGR for MHE market is more than 10 per cent for the next five years. This will be driven by growth in auto sector, infrastructure and also supported by factors like increasing cost of labour and GST." According to Gupta, mechanisation and palletisation are major growth drivers for MHE. Development of e-commerce industry in India is working as catalyst in expansion of warehouse equipment." He adds, "Major customers for material handling equipment are auto and ancillary sectors with 30 per cent share, process sector with 25 per cent, infrastructure, railways, and ports with 10 per cent, food industry at 10 per cent, logistics and others at 15 per cent."
According to CR Gole, Head - Forklifts, ACE, the entire range of counter balance forklifts can be divided into three major categories: light duty (1 T to 3 T capacity forklifts), medium duty (4 T to 8 T capacity forklifts), and heavy duty (10 T and above capacity forklifts). He says, "Forklifts up to 5 T capacity are the major selling segment and contributes to almost 85 per cent of the total requirements. Though this segment will continue to be the major growth drivers, however we see a considerable growth in heavy duty forklifts segment, mainly due to increase in import/export activities and exponential growth in ICDs."
In forklifts, the trend is more towards cleaner machines. The industry is also witnessing a movement towards electric battery operated equipment which are more environment-friendly. On total cost of ownership basis battery truck is more competitive than engine-based product. There are lots of intelligent electronics being used in forklifts, globally, a trend which is also slowly catching up here.
The customer parameters such as budget, specific needs, and existing infrastructure to great extent determine the pace of adoption of new technology. On the changing buying patterns, Gupta says, "Today more customers are preferring expenditure model over conventional capex model. Hence, demand for leasing and hiring of MHE is increasing. Many private players are already into this business. We have also started leasing through financial partners and hiring through channel partners."
He further adds, "Specific customer needs are catered through a wide range of products in Internal Combustion (IC), Warehousing (WH) and Electrical (E) segments, which can be customised with changing specifications of tonnage, lift height, transmission, battery capacity etc. Usage of attachments with standard truck is emerging trend in India. Currently, we are selling 40 per cent of our machines with customer-specific attachments. Hydraulic attachments like paper roll clamps, bale clamps, brick clamps, tyre handlers, rotators, stroker, furnace kit and others are made to meet specific requirements of various industries."
Says Gole, "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 a focus on operator comfort, safety and ultimate productivity in mind. Products are designed to be more reliable, efficient and service-friendly."
According to Gole, electric forklifts are the highest growing segment in forklifts market. The major reason being growth in logistic warehousing segment and also the customers inclination for pollution-free green forklifts. However, Gole also gives an insight into the major challenges in E forklifts. He says, "Though the segment is a major growth driver, the industry faces some of the challenges in this area: unlike diesel forklifts, electric forklifts have less power, short duty cycles, less ground clearance, less gradeability and limited use to covered/closed areas; the maintenance of electric forklifts requires skilled manpower, unlike diesel forklifts which can be repaired by road-side technicians."
Palletisation is the single most important factor which will push the demand for these products. Organised retail is just 8-9 per cent. As organised retail catches up, we can expect more and more palletisation happening. Compared to the developed markets where containerisation and palletisation is the norm, in India it is still at a slow pace. According to Gole, Indian customers have realised the importance of cycle efficiency, safety and wastage reduction, resulting into more of palletisation and mechanised handling. This will certainly boost the demand of forklifts in India.
Says Gupta, "Containerisation and palletisation are increasing in India but still at low pace compared to developed markets. However, it is expected to improve further as increasing import/export drive containerisation and palletisation which creates demand for MHE. Demand for warehousing equipment and electrical equipment is continuously increasing, partly due to increasing retail, e-commerce and food industry requirements. In future, India must find solution to change truck structure to flatbed making usage of material handling equipment easily." He further adds, "Cost-effective and reliable machines are required for ICD and CFS segment of customers. However, efficiency is still not the main driving factor of evaluation during equipment selection. Imported equipment and technology are entirely based on high efficiency model and we are sure that current scenario will change very fast."
Says Gupta, "Power options available are IC engines running on diesel and electric forklift, warehousing equipment working on batteries. Electric trucks have more efficiency in terms of power usage or working cost but have higher ownership cost. As battery-operated truck and WHE are eco-friendly, government must consider concessional taxation and duties as available to other eco-friendly sectors." According to Gole, there are three power options offered in Indian forklift market: electric, diesel, and dual fuel (petrol, LPG). In electric forklift, DC motor technology was used earlier, however now the trend is towards fully AC drive technology. In diesel, forklifts are now being offered with fully automatic transmissions unlike earlier supplied manual and semi-automatic transmissions.
Scope for on-board technology
Is there a trend more towards on-board technology in the forklifts in India? Explains Gupta, "This trend is getting popular in E and WHE equipment useful for energy saving and quick diagnosing resulting in less down time. Various options like operator sensors lift speed control, travel speed control, battery discharge controls are offered in these equipment."
Gole observes, "Onboard diagnostic is still not popular in India and is yet to be adopted by major forklift suppliers in India. Though some of the suppliers have already started offering partial on-board diagnostics, however full-fledged on-board diagnostic and remote control repairing through computers is still to be adopted by Indian manufacturer. This requires a lot of technology upgradation and availability of supply chain in India."
Kion India manufactures and sells MHE under brand of Voltas. Gupta says, "We sell IC forklift trucks with capacity ranging from 1.5 T to 16 T. These comply with BS-III emission standards and are most fuel efficient in their class. Electric trucks are eco-friendly with no air pollution and less noise, making them suitable for indoor application. We provide E trucks in capacities of 1.5 T to 3.5 T with full AC controls." He adds, "In diesel forklifts our popular 3 T automatic transmission is the only truck with fully automated version among Indian manufacturers with single forward and single reverse speed selection. This feature increases operator efficiency and ability to work for longer hours without fatigue."
Gupta further says, "For warehouse applications, we offer battery operated pallet truck for horizontal movement, stacker for vertical stacking and premium products like reach trucks with reach in-reach out, height pre-selection and other user-friendly functions." In WHE, Kion India offers products like stacker with variants - manual, semi-electric, fully electric and lifting heights up to 6.5 m; Battery-operated pallet trucks for horizontal movement and reach trucks for large warehouses which can reach up to 9.6 m. Operator sensors, overload protection system, travel speed control system, and belly button are key safety features for above machines." ACE manufactures over 1,000 forklifts per year and offers 1 T to 3 T capacity fully AC and DC drive electric forklifts; 1.5 T to 3.5 T diesel forklifts and 2 T to 3 T dual fuel forklifts. Says Gole, "Our light duty forklift trucks are considered to be the most fuel efficient forklifts and offer 30 per cent to 40 per cent more fuel efficiency." According to him, ACE engines offered in this range of equipment are compact in size, fuel efficient and service friendly. ACE engine on 3 T diesel forklift has directly mounted hydraulic pump which improves hydraulic system efficiency by reduced transmission loss. ACE has full-fledged modern CNC workshop to manufacturer its own range of transmission offered on ACE equipment. The automatic, mechanical and fluid coupling transmission offered by ACE is most efficient and reliable.
Goel further adds, "We manufacture up to 10 T capacity in-house. Since the current requirement of heavy duty forklifts in India is very small, investing in this class in India is economically unviable. Hence, beyond 12 to 35 T range, we have a tie-up for manufacturing outsource with leading manufacturer of heavy duty forklifts."
Back up support
As service and quick response to reduce downtime are very essential in the MHE segment, most of the major players have initiated various steps to optimise the O&M cost. Elaborates Gupta, "We have extensive sales and service network across the country with over 60 touch points. These include KION India branches as well as dealers offices. This wide network ensures sufficient reach in all industrial areas where our machines are working. We ensure the availability of well-trained service staff at these locations. We conduct periodic training programme, where we train our service staff about new products, field issues and new techniques. Availability of parts at customers touch points plays important role in quick response. All the locations hold sufficient inventory to support customers. Apart from putting infrastructure in place in terms of locations, people and parts, we also focus on service offerings like annual maintenance contract and full maintenance contracts to customers."
Gupta adds, "We provide scheduled and requested training programme for truck operators in order to operate our machines efficiently and safely.
We conduct basic and advanced training programmes based on customer requirements."
Says Gole, "With the philosophy of remaining near to customers, we have appointed more than 90 dealers across India besides its own 18 area/regional offices. We have also initiated and established toll-free customer care number, first in industry, for quick access and registration of complaints, if any. Complaints are documented and recorded. Audio recording with relevant information is forwarded to the concerned product service head, area manager and dealer for their quick action to resolve the customer complaint." He adds, "ACE gives special emphasis on trainings. We have full-fledged training centre with cut section and working model of assemblies/components/machines. Training calendar for operators and technician training are being followed under the able guidance of qualified trainers."
According to Gole, the current structure of different sales tax, octroi , 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. Gupta is on the page. He says, "Entry tax increases cost to customers whereas transport documentation like road permits and forms delay customer delivery. We are sure GST will improve the situation in India."
Gupta adds, "One-third of the machines are sold by importers which are expensive by about 25 per cent over local manufacturers. These are high technology machines with separate clientele. They do not compete directly with locally produced machines. However, we face direct competition from Chinese imported machines. We are fully prepared to counter this competition from importers by adopting cost-effective and proven technology within the KION group."
Says Gole, "Import of forklift from cheap international sources definitely affects Indian manufacturers. However, in the long run, product reliability, availability of spare parts and product support do pay for manufacturers like ACE."
Another major challenge is the availability of finance. Says Gupta, "Cost of financing is a major bottleneck for emerging customers. Further, customer end financing rate should be more transparent with option to select financier of his choice. IT could play major role to create this visibility."
Rental market in India for MHE is currently unorganised with very few major players. OEMs are entering this rental market, making it attractive and competitive to end customers. In future, we can clearly see rental will emerge as major consumers of material handling equipment. There is trend more towards rental fleet users. Customers, especially fleet user, 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. Says Gole, "We see huge potential in rentals in future; and we already have a fleet of machine for rental business."
With a future that is seemingly bright, the Indian logistics industry is certainly on the cusp of change. However, much of its success will likely depend on the various aspects that directly or indirectly influence this change. Advanced material handling and warehousing equipment have a vital role that can help speed up the processes. Introduction of GST, more focus on palletisation, and expected opening up of retail segment are all expected to boost the demand for forklifts.
"We are surely looking out to buy forklifts." - Tejasvi Lakhani, Head - Marketing, Spark Logistics
Are you planning to buy more forklifts in future?
We are in the process of moving to become a modern warehouse and a step in that direction is adapting pallet racking for our warehouse in Bhiwandi. Since forklifts are one of the workhorses of modern industry, we are surely looking out to buy forklifts to support it.
What are the major parameters you consider while buying a new forklift?
The major factor would be the weight it can carry and to start with we are looking to go with the industry standard i.e 5,000-lb forklifts. Since we are going for pallet racking we are also looking out for forklifts that would reach a good height.
How do you address the issue of lack of trained operators?
We realised very early that to add value and support the technology we have, we will require highly trained professionals. And to bridge this gap, we have invested a lot in continuous training sessions for our manpower and enhancing their skills.
DISADVANTAGE OF ELECTRIC FORKLIFTS
Unlike diesel forklifts, electric forklifts have less power, short duty cycles, less ground clearance, less gradeability and limited use to covered / closed areas. The maintenance of electric forklifts requires skilled manpower, unlike diesel forklifts which can be repaired by a road side technicians.