Commercial Vehicles April 2020

The Forklift Truck Market Now and Moving Forward

Maya Xiao
Maya Xiao

Maya has an interdisciplinary technical background in vehicle electrification, system automation and robotics. Based in China, she is the lead analyst for Interact Analysis’ Li-ion battery and forklift research, also covering markets for industrial and collaborative robots.

Our post-COVID-19 neutral scenario (we posit 3 scenarios – positive, neutral and negative) sees global forklift shipments in 2020 growing by just 1.4%, as compared with 2019. This is a significant downward revision from our previous forecast of 3.7% growth, made in late February 2020. However, the COVID-19 pandemic is likely to result in the re-shoring of some manufacturing industry and the accelerated adoption of automation to insure against future supply chain disruption. All this is expected to accelerate medium-term growth in the lift-truck market. As a result, we have increased the 2021 global shipment growth rate forecast from 6.5% to 8.2%. After 2023, the market growth rate will most likely return to the levels we predicted before the outbreak started.

The current forklift truck market is split roughly 60-40 between electric and diesel vehicles. Electric trucks powered by lead-acid cells have been on the scene for years, and these trucks currently occupy circa 80% of the electrified market. In our new report, Interact Analysis has used predictive modelling to forecast a clear shift away from diesel power in the next decade in favour of electric; and a move away from lead-acid batteries in favour of Li-ion batteries and hydrogen cells.

In recent years, there has been strong growth globally in the forklift truck sector. Notwithstanding the negative growth rate in shipment terms in 2019 (-0.7%), mainly caused by the global economic downturn, and an extremely high 2018 base number, as well as poor growth in 2020 owing to COVID-19; we predict a recovery and strong growth from 2021, with class 2 and 3 trucks seeing the most significant increase in market share. Looking forward to 2028, we forecast a total shipment number of 2.4 million units, with a 4.5% CAGR (See Fig.1).

What are the growth-drivers in the forklift truck sector?

Post COVID-19, the recovery of the manufacturing industry will be slower than the logistics industry. The growth in logistics – warehousing and distribution centres – already fuelled by the boom in e-commerce, has been the main reason for the high demand globally for forklift trucks. This is likely to be accelerated after 2020, as we predict the pandemic will bring about a permanent change in consumer habits, with more people using online shopping. The recovery rates of different forklift classes will be varied. The market for Class 2 & 3 trucks will be more affected in 2020, but the recovery will be fast. The overall trend for electrification will not be affected. According to our model, the replacement rate of lithium-ion batteries for lead-acid batteries has not changed. Shortage of labour and the trend towards increased automation have also been drivers in the lift-truck market.

The predicted shift away from diesel powered vehicles to electric arises from the fact that the proliferation of large distribution warehouses in recent years are indoor environments and have a much higher requirement for zero noise and low emissions. Electric trucks are well-suited to such environments and not only for reasons of pollution. These trucks typically only cover short distances, meaning their range is not an issue in, say, an 8-hour shift. In the future the electric truck market may be further boosted by the growing trend towards e-commerce micro-fulfilment, where companies build tiny warehouses in residential areas to allow same-day delivery or delivery in specific hour slots. These establishments need to be quiet as they are near domestic housing.

Lead-acid batteries have been long held to be a cost-effective battery chemistry and have dominated the electric forklift truck market. The technology is reliable, and supply is secure. However, Li-ion batteries have major advantages over lead-acid, outlined in the next section. We predict that the fast development of Li-ion battery technology and the expansion in production will mean that by 2028 electric vehicles, predominantly powered by Li-ion batteries will occupy 70% of the forklift truck market (See Fig.2). This will be a rise from 63% in 2019. But the emphasis in 2028 will be on Li-ion power sources, which will occupy almost 50% of the total truck market. Class 3 trucks will account for 43% of total shipments, and over 75% of them will be lithium-ion battery forklifts. Mainstream forklift suppliers worldwide have already launched lithium-ion battery models. And there will also be new entrants into this market, such as BYD, who focus only on Li-ion battery-powered forklifts and manufactured over 30,000 units in 2019.

Electric power – The Challenges

Our favourable predictions for Li-ion battery power do not mean that there won’t be challenges to overcome. Lead-acid battery power already has a strong presence on the shop floor. Only when companies buy new forklifts will they move from lead-acid to Li-ion technology. Manufacturers of Li-ion powered trucks will have to spell out clearly the cost benefits of Li-ion over lead-acid. The initial higher cost will need to be offset by aggressive marketing of the advantages of this technology, such as superior energy density, cycle life, efficiency, low maintenance and shorter charging times. In the meantime, battery developers will need to strive to further enhance the plusses of this relatively new battery technology. Charging times are always an issue particularly in massive warehouses where the charging requirements of a large fleet of trucks could put unacceptable stress on the grid.

Amazon and Walmart in the USA, and Carrefour in France, have got around the problem of charging large numbers of trucks at once by using vehicles powered by hydrogen fuel cells. Indeed, these three companies form the bulk of the entire hydrogen forklift market. The high initial purchase cost and insufficient hydrogen filling facilities are the main factors restricting the development of fuel cell forklifts; at the same time, hydrogen gas is difficult to store and move round, it’s highly inflammable, and its production depends on the use of fossil fuels. Europe and North America are already using PV panels for production to ensure cleanliness but this, in turn, drives up the overall cost of fuel cells. For these reasons, though we predict that hydrogen trucks will increase in number, while the technology is in its relative infancy its market share will be limited. It’s worthwhile mentioning Plug Power here. An American company specialising in the development of hydrogen fuel cells, Plug Power has convinced many US forklift truck manufacturers to go into partnership with them to build hydro forklifts. More than 90% of hydrogen-fuelled forklifts sold in 2019 were in the North American market. By 2028, we predict Europe will have achieved a 44.1% market share, but elsewhere, in APAC, there is limited enthusiasm for the technology, hydrogen production and hydrogenation measures being the main limiting factors.

Regional Trends

The impact of the COVID-19 will vary considerably by region (due to the speed of measures being implemented to contain it) and will occur over shifted timescales (e.g. APAC first, followed by Europe and finally North America). As such APAC will see the first and quickest recovery, with less impact in 2020 compared to other regions.

In 2019, China accounted for 37.9% of the global forklift truck market, followed by Europe and North America with shares of 31.3% and 16.0% respectively.

In Europe, more than 80% of shipped forklift trucks were electrified in 2019. While the figure was 65% in North America, and less than 50% in APAC. The penetration rate for electrified forklift trucks in China is much lower than the rest of world. The relatively low figure for APAC is eye-catching, given that the lion’s share of Li-ion battery production is in that region. But Interact Analysis predicts that this market will see the strongest growth in electrification in the next few years and drag APAC’s electrification rate to 61% in 2028 (See Fig.3). Government policy on emissions will be the main driver.

This insight has given readers a glimpse of Interact Analysis’s full and detailed report on the electric forklift truck sector which spells out what we consider to be significant investment and collaborative opportunities for truck manufacturers and Li-ion battery producers.

Posted in: Commercial Vehicles.