Manufacturing, warehousing and construction are on the rise thanks to a recovering economy and an increase in consumer retail spending. The rapid growth of e-commerce in particular has created a large demand for industrial buildings, and thus, increased demand for material handling equipment. The explosive surge in warehouse and distribution activity shows no sign of slowing down, and while a recovering economy is good news, the downside to this increased demand for warehouse equipment is higher prices. In addition to supply and demand affecting the cost of equipment, the price of steel is on a steady incline, playing a substantial role in higher production costs and ultimately, consumer prices. So, we have a positive market trend that may also strap your budget when it comes to expanding your warehouse or replacing equipment. What are the best ways to cut warehouse equipment costs?
Buy Sooner Rather Than Later
Online retail orders and shipping have steadily increased by double digit figures every year since 2000. This ease of shopping online is changing both the retail landscape and warehouse requirements, and as online sales become even more prevalent, warehouse needs will continue to grow. In short, there’s no going back, so your best bet is to by sooner rather than later.
If upfront costs are a stumbling block, there’s no need to let your project die due to cash flow issues. This may be the time to consider leasing equipment, including pallet rack systems. There are several options available for avoiding a large capital expenditure on the front end:
3rd Party Leasing Company
Use a 3rd party organization to handle the equipment leases. If your budget doesn’t allow forlarge equipment purchases upfront, you can work with independent leasing companies to make monthly payments over a period of time. A lease provides the lessee with the flexibility of little to no down payment, lower monthly costs, and the ability to return or release the equipment at the end of the initial lease. These type of leases usually allow the lessee the possibility of upgrading the equipment prior to the end of the lease term.
Speak directly with your equipment supplier; it may be possible to come up with a rental agreement that works for everyone.
In some cases your landlord may be willing and able to incorporate your storage equipment needs into the building lease.
What About Used Equipment?
Though we are pallet rack manufacturers, that does not mean we are 100% against used equipment. There are times when a straightforward situation may be fine for a used pallet rack system and other equipment, such as forklifts. (To learn more about what you need to know before purchasing used rack, refer to this article on our blog, New vs Used Pallet Rack.)
While it may be ok to opt for used equipment on some occasions, you will usually save more in the long run by purchasing new. Getting enough rack of the right size for optimal efficiency is often a daunting task, and the results are usually less than optimal. In short, there is really only one benefit to buying used rack, and that’s to save on the upfront cost. Sometimes, that savings is worth the risk, more often than not, used pallet rack will cost you significantly more than you might expect.
Anytime safety is the primary concern, especially in seismic conditions, new pallet racks are always the safest choice. For any type of specialized pallet rack system, a new rack system will be the only way to ensure that the rack is custom-designed for your environment, for efficiency and savings in the long run.
Take the time to consult with a certified engineer before making a costly error by trying to save a few dollars on the front end by purchasing used rack.
When it comes to forklifts, used lifts are best for environments that need to use them fewer than seven days a week and only during one shift per day. If you put a used truck under heavy use, you may end up paying more in repairs and maintenance than if you bought a new one to begin with.
Money Saving Tips when Purchasing New Equipment
Don’t overbuy capacity. Know your actual load weights, pallet sizes, lift heights, etc. It pays to take the time to make sure of the exact requirements needed to avoid paying for features that you don’t need.
Shop around, and don’t forget to consider the shipping costs, especially for pallet rack. Did you know that bolted rack is less expensive to ship if it’s knocked down? A 40 foot truck filled with welded uprights maxes out at about 20,000-25,000 pounds, whereas a truckload of KD uprights will hold about 44,000-48,000 pounds of product–meaning the welded uprights will cost at least twice as much to ship. The freight savings on KD rack is significant and usually far outweigh the cost of assembly. (To learn more about the other advantages of bolted rack, click here.)
Next Level is committed to helping our customers increase efficiency and profitability through lower material expenditures and cost efficient design solutions. Our FlexRack™ pallet rack is 100% bolted for greater strength, as well as freight savings. Learn more about FlexRack™ here.]]>