Lease or Buy: The Age-Old Forklift Fleet Question

Under ideal conditions, you will always have exactly the right number of forklifts in your fleet to handle your current business conditions.

Unfortunately, business conditions never remain the same. So the decision as to whether you need to rent or buy the forklifts in your fleet tend to be a bit more complicated. As a result, at any given point in time you may have too many forklifts to perform not enough jobs, or not enough forklifts to do too many jobs.

This is what makes managing the size of your forklift fleet a challenge.

A lot of businesses err on the side of caution by keeping too many vehicles in their fleet just in case they need them or holding on to older equipment long past its useful life. After all, nobody wants to be the fleet manager who has to explain why you don’t have enough forklifts to keep up with business demands!

Yet about 75% of companies probably have too many forklifts at any given moment, according to Derek Knapp, national accounts manager for Kenco Fleet Services. And most could probably get rid of 10% to 15% without feeling any pressure even during their busiest periods.

Using Data to Determine Your Fleet  Size

Modern data collection tools can give a very accurate picture of a fleet’s productivity. Lift trucks are only used about 40% of the time, according to Jim Gaskell, director of Global Insite Products for Crown Equipment. That productivity could be greatly improved if fleet managers only accessed and used the information they already collect from onboard sensors and corresponding software

It’s now possible to get a highly accurate picture of the total cost of ownership of each individual forklift and how it relates to your fleet size. This can help companies predict exactly how many hours they will use a vehicle, rather than taking their chances by signing a 60-month lease or investing in a new lift truck and hoping they get their money’s worth.

The Driving Metric: Cost per Hour

The key metric to look at is the cost per hour of operate a lift truck. This can be calculated by dividing the monthly lease payment into the number of hours that forklift was used in a month. But that figure can be misleading unless you add in maintenance costs.

Tim Combs, executive vice president of marketing for The Raymond Corp., said fleet managers should look at the payment structures for each separate piece of equipment in their fleet. Renting a vehicle for an entire month — or for longer terms, such as 6-, 12, 18-, or even 60-months — is the most expensive option, especially if the vehicle is only going to be used for a few days, weeks or months during the life of the lease.

Renting by the Hour or Day?

Short-term rental typically will cost you more on the front end, but if you maximize the vehicle’s productivity during the time you have it, you often experience substantial savings. Plus, with short-term rentals you usually don’t have to worry about maintenance and repair costs.

Another option is to simply buy the piece of equipment. But can end up costing you more because you have to pay all the maintenance, repair and storage costs. And at the end of its useful life, it’s worth practically nothing in resale value.

There are no easy answers when it comes to managing the size of your forklift fleet. But by paying close attention to how much actual use you get out of each vehicle you have, you can maximize your return on investment.