Despite continuing economic headwinds and market volatility UK orders for new forklift trucks are, in the main part, positive – although material handling solution providers remain cautious, economic experts have said.
The snapshot of the industry is contained in the 2024 UK Forklift Truck Market Outlook, compiled exclusively for the UKMHA by analysts at Oxford Economics. The report focuses on the third quarter of 2024, a period which has been characterised by a shift in fiscal policy under the new Labour government.
Confidence among UKMHA members over the period is mixed. The members’ survey shows that compared to the spring report, a higher proportion of respondents feel more confident about the general prospects of the forklift market over the next year. While a higher share of firms are less optimistic about the outlook compared to six months ago, the percentage of respondents feeling more optimistic (32%) still outweighs the proportion who feel less optimistic (14%).
Most respondents (46%) said labour shortages continued to be the most significant challenge to their businesses. That said, a higher proportion of firms feel that other problems such as inflation and low demand are also negatively impacting their operations.
Commenting, Rob Fisher, UKMHA CEO, said: “While it is pleasing to see that forklift orders are set to rise across this year, confidence levels among members remains a matter of concern.
“The focus on labour shortages bears out our own findings, which is why we have chosen to focus on attracting new talent through apprenticeship schemes and upskilling programmes. By encouraging more young people into the sector we will bolster the long term prospects for the material handling and intralogistics industries.”
The economic analysis contained in the report suggests total forklift orders will grow by 6.1% in 2024 and 1.5% in 2025. The strong expansion [in 2024] will be driven by warehouse orders, supported by improved consumer spending.
Growth is forecast to slow in 2025 as warehouse orders revert back to their long-term trend following the upheaval of recent years.
However, many of the predictions have had to be tempered following the decisions taken by Chancellor Rachel Reeves in her first Budget.
Despite inflation falling below the Government’s 2% target threshold, the economy remains volatile, with the picture muddied by declining levels of optimism.
“The fiscal tightening announced in the October Budget presents a key headwind to consumer spending and will add to the impact of the expected extension of the freeze in most income tax thresholds,” states the report, with the analysts adding “industrial production, which has been more impacted by higher financing costs, is expected to trail GDP at 0.9% growth in 2025, following stagnation this year.”
With market growth being driven by warehouse orders, the picture for the Counterbalance truck market is less rosy where a modest expansion in investment alongside stagnant industrial production will be the likely trend.
“Counterbalance orders are set to contract for a third consecutive year due to weak investment, but then enter a period of recovery from 2025,” states the report. It adds: “Total forklift shipments exceeded our expectations in 2024 Q1, so we now expect a smaller contraction of – 11.7% [for 2024]. As we expect the recovery in total orders for 2025 will be more muted, there will be a slightly larger decline in shipments (4.4%) than forecast in the Spring 2024 report.”
The expectation for the counterbalance market is that orders for class 1 trucks will decline by 14.3% in 2024 followed by 7.9% in 2025. Demand for class 4/5 trucks is predicted to recover following sizeable contractions in 2022 and 2023, despite recent issues with LPG fuel contamination.
Commenting on the picture, David Goss, UKMHA Technical Director, said: “The weakness in orders during 2023 for traditional internal combustion-powered counterbalance trucks was felt in both the diesel and LPG segments of the market. This suggests that it’s unlikely that LPG fuel contamination negatively impacted overall demand.
“Nevertheless, there are concerns in some quarters that the decline in sales of ICE-powered trucks may be happening too fast as the long-term trend towards electric-powered trucks continues to re-shape the market.”
The resolute demand in online shopping continues to support Warehouse orders. As the consumer environment improved over 2024, warehouse orders expanded during the first half of 2024. This has led analysts to forecast a growth in orders overall of 15.1%, marking a partial recovery from the contraction experienced in 2023. They predict orders will continue to grow but at a slower rate over the medium term, reverting back to their long-term trend. Taking this into account, the forecast is for orders to grow at 1.2% and 1.1% in 2025 and 2026 respectively and remain broadly stagnant in 2027 with a 0.3% expansion.
The outlook for class 2 forklifts is stronger than for class 3. Class 2 orders saw larger contractions in 2022 and 2023, and a sharper recovery is forecast. The expectation is that class 2 orders will grow by 23.9% in 2024 and 15.7% in 2025. Meanwhile, class 3 orders are set to expand by 13% in 2024 but contract by 2.7% in 2025.
“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,” said Mr Fisher. “The UKMHA is pleased to offer this as a valuable member benefit.”
