The UK material handling industry can look forward to a better 2021 but must remain resolute in the face of the ongoing pandemic and the bedding in of post-Brexit trade deals, the UK Material Handling Association (UKMHA) has said.
The new association, forged from an alliance between the British Industrial Truck Association (BITA) and the Fork Lift Truck Association (FLTA), together with their co-owned subsidiary, Consolidated Fork Truck Services (CFTS), said a quick recovery in the UK material handling industry from the economic upheaval suffered in 2020 was unlikely – but there was good reason to be optimistic for later in the year.
However, any return to pre-pandemic levels of business is unlikely until 2023 at the earliest.
In its latest UK Forklift Truck Market Outlook, prepared for BITA, the Oxford Economics consultancy said the roll-out of the COVID-19 vaccination programme offered hope that lockdown restrictions could start to be eased relatively quickly, while initial disruption due to the new trading arrangements with the EU might settle down by the second quarter as firms adjust to the new procedures.
“Lifting restrictions on social consumption, and the associated boost to confidence, would allow a strong recovery to take root from Q2 2021. There are many uncertainties around production levels and the logistics of rolling out such a large programme, but we judge this timeline sufficiently plausible that we have adopted it as our baseline assumption,” said the report.
So, while the prospects for later in 2021 look brighter, there is still likely to be a rocky period to negotiate before any economic benefits from the vaccine programme begin to be felt.
“Against this backdrop, we expect bookings will continue recovering in 2021, following their sharp slump in the first half of ,” adds the report. “However, with economic activity remaining below its pre-pandemic level of activity in both 2021 and 2022, we do not expect bookings to surpass their 2019 levels over this forecast horizon.”
Overall, bookings fell 24% in 2020. Oxford Economics projects 19% growth in 2021 and 6% growth in 2022.
By sector, counterbalance bookings were worst hit in 2020, falling 29%. This reflects the sharper fall during the downturn, dropping 55% between Q4 2019 and Q2 2020. In 2021, the forecast is for a partial recovery, rising 27%.
Prior to the pandemic, counterbalance bookings were struggling, falling 5.2% in 2019, with weakness most pronounced in Class 4/5 bookings. The global pandemic has delivered an additional shock, with Class 1 and Class 4/5 bookings falling 21% and 34% respectively last year, characterised by a sharp drop in H1 2020, a strong rebound from Q3 2020, and a modest stalling in November 2020, due to the second lockdown.
Taking all this into account, bookings are expected to recover in 2021 and 2022. However, bookings are projected to remain below their pre-coronavirus 2019 levels over the next two years, reflecting the sluggish recovery in UK industry.
Warehouse orders were also hit hard during 2020, due to the sharp decline in activity, with Class 2 bookings falling 22% and Class 3 bookings dropping 19%.
The weakness in warehouse bookings primarily reflects the drop in consumer spending in the first half of the year, particularly in high-contact consumer services. However, the growth in online shopping during lockdown bolstered the e-commerce sector, a situation likely to persist during Q1 2021 and possibly longer.
If social distancing restrictions can be meaningfully reduced from the spring and consumer confidence improves as a result, then the forecasters predict a strong consumption-led recovery could take root from Q2 2021.
Nevertheless, warehouse bookings dropped 19% in 2020. There will be a partial recovery in 2021, with growth of 13%, followed in 2022 by 6% growth. Confident predictions will depend significantly on how the pandemic is managed.
Despite positive vaccine news, coronavirus cases remain high, and bearing this in mind, forecasters have said there is a chance social distancing could remain in place for most of 2021 – especially if there is a delay in the roll-out of mass vaccination programmes. In this scenario, restrictions on public movement and business operations could limit consumers’ ability and desire to undertake discretionary spending. With unemployment likely to rise, amplifying the weakness in spending, consumption could fall below baseline predictions from Q1 2021, with the economy remaining subdued throughout the year.
Tim Waples, Chief Executive, UKMHA said: “Verification of a tough 2020 for the material handling industry was hardly unexpected, and the reintroduction of lockdown has delayed recovery – at least in the short term. Nevertheless, I choose to focus on the positive aspects of the report and, with the hope that the vaccine programme will spearhead recovery, there are still plenty of reasons to be optimistic for later in the year.
"With the UK now getting to grips with life outside the EU, hopefully we can soon return to as near normal relationships in terms our trade with Europe. Being able to plan with conviction for the year ahead will be very important.”