The UKMHA has warned the UK’s material handling industry faces a tough second half of 2023 as inflationary pressures and cost of living issues continue to dominate the domestic economic agenda.
In its latest Forklift Truck Forecast for the Spring of 2023, prepared exclusively for the UK Material Handling Association (UKMHA), analysts at Oxford Economics have predicted that total bookings growth for 2023 is likely to contract as economic growth remains elusive.
However, they said this is in part, due to a normalisation in bookings due to the strong growth in 2021, which the authors of the report said was an exceptionally strong year as the economy bounced back from the impact of the Covid-19 pandemic.
There was more positive news on order backlogs, which the economists have said are likely to ease during the year as manufacturers look to complete orders already on their books and the supply of components improves.
“It will take time for firms to clear the backlog of orders, therefore we have forecast growth of counterbalance deliveries in 2023 with a total growth rate of 18% for class 1 and class 4/5,” states the report.
The counterbalance segment is expected to remain subdued in 2023, with a forecasted fall in orders of around 12 per cent, with classes 1 and 4/5 also declining. However, the picture for 2024 looks more positive with forecasted growth of 2 per cent in new counterbalance bookings.
The picture for the warehousing sector is similarly skewed due to the unusual profile seen during 2021, where class 2 orders rose 66 per cent and class 3 by 41 per cent. Whilst the surge in growth from the e-commerce sector was more subdued in 2022, the sector remained buoyant, although the squeeze on discretionary spend is thought to have negatively impacted the market, especially with consumers moving more towards services now these sectors have fully reopened and restrictions on international travel have been relaxed.
The Oxford Economics analysts have said warehouse orders are likely to fall considerably during 2023 as the cost of living crisis continues. However, they expect the situation to ease from 2024 onwards, with a recovery in orders of 2 per cent next year, rising to 4 per cent in 2025.
The economists say the skewed picture created by the pandemic bounce back disrupted typical market trends in the warehouse sector, and during 2023 and into next year when things stabilise, orders are expected to revert to their long-term trend.
Commenting on the data, Cameron Burnett, Director, UKMHA said: “With the ongoing disruption to the UK economy we had been cautious about what to expect in this latest forecast. Whilst the picture for 2023 looks subdued, this was hardly unexpected considering all the external factors influencing the economy.
“On a more positive note, the report indicates a strengthening from next year onwards – albeit modest – but this will still be welcomed by the UKMHA membership.
“Having access to such detailed economic forecasting is a great help to our members allowing them to formulate their strategies for the second half of the year and beyond. The UKMHA is pleased to offer this as a valuable member benefit. In fact, the forecast is often used as a barometer for the health of the wider UK economy.”
