The electric forklift rental business model benefits greatly from switching the equipment to lithium batteries from widespread lead-acid batteries. Lithium batteries have longer lifespans, are more economical and durable, and require less maintenance, resulting in improved profitability for forklift dealers and helping customers achieve their sustainability objectives. As forklifts become increasingly electrified and rental fleets expand, lithium batteries are a wise investment for both dealers and renters.
Long-term rental of forklifts
When renting forklifts for extended periods, the switch to Li-ion batteries provides similar advantages as leasing or buying own equipment. These benefits can be summarized as follows:
- Reduction in labor costs for maintenance (no need for daily watering and synchronization charges), resulting in 20-40% savings on the total cost of ownership of material handling equipment.
- Lower electricity use, leading to lower carbon emissions during operations, due to higher efficiency of energy conversion of lithium batteries.
- Improved overall efficiency in operations with less downtime and better forklift performance.
- A cleaner and safer workplace when compared to using flooded lead-acid battery packs.
Companies may choose to buy new or select used electric forklifts in online classifieds and get all these benefits of lithium technology. But what about those operations that opt for short-term rental of their forklifts?
Short-term rental of forklifts
When it comes to renting forklifts for shorter periods of time, dealers face unique challenges. Renters have no incentive to invest in the proper maintenance of the batteries, often neglecting to water them regularly or synchronize their charge, returning them “dry” at the end of the lease term. The renter is required to run the tests and discuss the potential reimbursement for the damage and service labor, which no one likes to do.
Here is how Eddie Burke, President and owner at Combilift Depot in Houston, TX, describes the problem: “We rent equipment all over the country, and can’t send technicians for daily watering. Most machines are rented out monthly, and when they come back, we inspect the battery, if it is damaged it is hard to determine whose fault it is… You can’t prove (if it is the customer’s fault), and I don’t want to argue with the customer over the damage to the battery. We are switching to li-ion, so the conversation is more like – “Is there a hole (in the battery)? No? We are good!” It’s just so much easier to do the testing (of a lithium battery) and make the judgment call.”
Combilift Depot spends 4-6 hours of technician labor per lead-acid battery for diagnostics and service each time it is rented out and returned. Taking into account the much longer cycle life of a lithium battery, the savings are impressive. Eddie Burke continues: “In a perfect world a well-maintained lead-acid (battery) lasts 5-6 years, in rental conditions, it is great if it gets to 2-3 years when you start replacing cells. With OneCharge Li-ion (battery) we expect 10 years (of cycle life), it is a no-brainer”.
A dealer would typically sell used equipment after 5 years, and the value of a lead-acid battery by this time is zero. With an advanced forklift battery, such as OneCharge, a buyer gets a full picture of the cycles left in a battery and can calculate how many years it can be expected to power the truck he buys.
Rental contracts can be irregular, and if left idle for even a few weeks, a lead-acid battery can lose its charge and suffer permanent loss of capacity if not cared for properly. The worst thing that can happen to a lithium battery is if an operator forgets to charge the battery pack.
Compared to lead-acid batteries, lithium-ion batteries are much more energy-dense and do not lose voltage with discharge. This means that a lithium battery with a lower Ah capacity can still cover most needs of a diverse pool of forklift renters, significantly reducing the cost of purchasing batteries for dealers. Additionally, lithium battery chargers are much smaller and lighter, which makes them easy to install or wall-mount around the facility.
Growing popularity of equipment rentals
In a recent article published by Forkliftaction, Rod Dayrit – the Business Development Director at Delta-Q Chargers – highlights the increase in equipment rental growth. He explained that forklift buyers see very long lead times for new equipment, and dealers are facing challenges in meeting demand due to economic factors such as high inflation rates and supply chain disruptions.
Due to the rising costs and low availability of the new equipment, more and more end users are opting to rent instead. This helps them have fixed costs, and avoid potentially depreciation costs related to the unstable economic situation.
Eddie Burke says the growth of the rental business started before COVID, but has accelerated in 2020: “We’ve seen a steady increase over the last 5 years. The current economic uncertainty with a war starting in one country and a government overthrown in another, with the US presidential election next year, pushes customers towards the rental model”.
According to the American Rental Association (ARA), equipment rental revenue in the United States is expected to continue growing. In their 2023 update, the ARA projected a 7.6% increase, which would amount to $60.4 billion in revenue for construction and general tool rentals.
Lithium forklift batteries offer unique benefits for the burgeoning market segment of forklift fleet rentals by completely eliminating the pain of irregular service and maintenance. Lower required capacity, long cycle life, and significant savings on the total cost of ownership help accelerate the electrification of equipment and improve dealers’ bottom line while helping their customers achieve their sustainability and safety goals. Eddie again: “For the renters, the change to lithium (technology) means no maintenance, no obligations to watering, which is always a big mess, lower electricity use, and no damages discussions. And – safety guys do not like lead-acid batteries!”