Warehouse managers are sharpening their focus on the batteries, chargers, and forklifts they are running in light of escalating energy costs—and suppliers are at the ready with solutions designed to maximize productivity and reduce expenses.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Rising energy costs are taking a toll on consumers and businesses alike, and in the warehouse, that means companies are placing a sharper focus on the systems and equipment they are running as well as the power those systems consume. This is especially important when it comes to the forklifts traversing warehouse floors nationwide. As warehouse managers seek ways to get more out of that equipment or upgrade to energy-efficient and productivity-enhancing solutions, they are increasingly turning to equipment suppliers to learn about the latest technologies and automation strategies that can reduce costs.
“[Inflation and higher costs] are accelerating some trends we’ve seen in the industry for a few years now—[especially] demand for automation and new power systems,” explains Bill Pedriana, chief marketing officer for material handling equipment manufacturer Big Joe Forklifts. “[There is a] huge appetite out there for both of those things. In some cases, there is an appetite for both at the same time. Labor costs, power costs, all costs are going up, [and] companies are scrambling for a more efficient means of moving things through their supply chains.”
For many, those strategies begin on the warehouse floor, with new battery technologies, upgraded equipment, and in-depth analyses that can boost equipment performance and deliver data that can help managers make more-informed decisions. Here’s a look at what some battery and equipment makers are doing to help customers reach their energy- and cost-savings goals.
ENERGY-AS-A-SERVICE
Leaders at Quebec-based lithium-ion (Li-ion) battery company UgoWork set out to help industrial customers get a better handle on their energy usage in the warehouse seven years ago, when the company’s founders recognized a common problem in warehouse logistics: Forklift battery maintenance and energy management were taking too large a share of warehouse managers’ time—time that would be better spent focusing on ways to get products in and out of the facility faster and more efficiently. UgoWork’s leaders were confident that switching from traditional lead-acid batteries to Li-ion solutions would solve that problem for many companies—especially those running large fleets—but the higher cost of Li-ion batteries was too much for many customers to swallow.
So UgoWork developed a subscription-based model that removed the upfront costs of purchasing Li-ion batteries and chargers, giving customers a more affordable way to make the switch. For a recurring monthly fee, users get a Li-ion battery and charging station along with access to UgoWork’s cloud-based software system that monitors and manages the battery. The program is similar to subscription-based software-as-a-service (SaaS) programs designed to help companies outsource IT needs.
“The whole idea behind UgoWork and energy-as-a-service [is to] provide a sole supplier for everything related to energy—with the mission to really change how the industry operates,” explains Jean-François Marchand, the company’s director of marketing. “With the energy-as-a-service option, there is no [capital expenditure]. It is a pure subscription model that removes that problem of adoption—because you eliminate the upfront equipment costs.”
The model is gaining steam as companies attempt to manage today’s higher energy costs—largely because it gives them a partner that manages their energy use and makes sure they’re getting the most out of their equipment. Marchand offers an example: A UgoWork customer was using 20 forklifts in one area of its warehouse. Switching to trucks powered by Li-ion batteries improved uptime by reducing the amount of charging time required for the equipment—a standard savings when switching from lead-acid to lithium, according to Marchand. But UgoWork was able to dig deeper into the equipment’s usage—via its energy-as-a-service monitoring system—ultimately discovering that the customer could do the same work with fewer forklifts. In the end, the customer removed seven trucks from that particular section of the warehouse, reallocating them to other areas.
“That’s huge in terms of cost savings,” Marchand said. “It’s one example of what data can bring in terms of real-life savings.”
Using energy-as-a-service also helps customers maintain a more predictable energy budget, according to UgoWork.
“By using a subscription model, they know their fee will be stable, or at least proportional to their energy usage,” Marchand explains.
INSIGHT AND ANALYSIS
For years, battery and equipment makers have provided power consumption studies designed to give warehouse managers a look at just how well their equipment is performing. Such studies—which can be conducted on all types of batteries and equipment—evaluate warehouse workflows as well as examine how much energy a particular forklift, or an entire fleet, is using. The feedback can lead to solutions for better equipment usage and energy management. Pedriana, of Big Joe Forklifts, says he’s seen a renewed interest in such studies as energy costs rise.
“Workflows are central to material handling … direction, flow, quantity, speed of goods through a facility—they are all important,” he explains. “[Customers] are looking at all of that with fresh eyes: How much energy is being consumed? What’s the best sequence of workflows from a power-consumption basis?”
Battery management systems (BMS) also help by continuously monitoring batteries in the warehouse. These electronic devices monitor and regulate the charging and discharging of batteries, tracking factors such as battery type, voltage, temperature, capacity, state of charge, power consumption, and remaining operating time. And increasingly, such systems are tied in with forklift telematics, which collect and analyze interactions between the fork truck and the battery, generating data that can help users adjust workflows and operating conditions to improve efficiency and reduce costs.
“[The data could reveal] where charger placement might be advantageous, for example,” Pedriana explains. “Or, if we’re running [equipment] at peak hours, can we reduce costs by changing when we operate trucks? There are so many tools people can use to really drive down their operating costs.”
LONG-TERM PLANNING
In addition to rising costs, other market developments are complicating warehouse leaders’ efforts to manage their energy needs—particularly, longer leadtimes for new or replacement equipment, according to Trevor Bonifas, general manager of sales, motive power, for material handling equipment manufacturer Crown Equipment. E-commerce and other trends have boosted the volume flowing in and out of warehouses over the past two years, and many warehouse managers are taking the opportunity to add equipment or upgrade to new, energy-efficient systems to handle that volume. Supply chain disruptions and materials shortages mean they could wait a year or more for that new equipment—and in the interim, they have to figure out how to address both current and future demands for power.
“[Customers are telling us], ‘I need to get something new today, but I need something that will work with my equipment that will be replaced a year or two from now,’” Bonifas explains.
He offers an example: If a customer replaces a charger or charging system to boost equipment performance today, that customer wants to make sure that whatever charger it buys will work with any new equipment that arrives in a year. Bonifas says he spends a lot of time figuring out how to best address that problem.
“Ultimately, we go in and talk about how they are using power today, how they expect to use it tomorrow, and we put a device on the equipment to see what they are consuming and what solutions make the most sense today or a year from now,” he says.
That could mean a new charger, an entirely new truck, or even a replacement piece or part that will make the equipment more efficient. For customers using lead-acid batteries today but who plan to switch to Li-ion in a year or two, Crown Equipment offers a flexible solution designed to address both needs—a charger that can charge both types of equipment with the switch of a DC cable and connector.
“Across the entire industry, leadtimes are at historically long levels because of the growth in demand [for new forklifts],” he says. “We have the ability to put in a lead-acid charging solution that has the capability to switch to lithium when the equipment comes in. … That allows some flexibility for those customers who need something today, but say ‘What do I do a year from now?’”
Customers’ growing interest in these and other energy-saving solutions is a sign of the times—and a concern Bonifas and other industry professionals say is here to stay for those on the warehouse floor.
“With the rise in costs, for anything, it comes with a thirst for more data and knowledge,” Bonifas says. “Customers are saying, ‘I’m paying more for this, so I want to make sure I’m getting what’s right.’”
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
Chinese supply chain service provider JD Logistics today announced plans to double its overseas warehouse space by the end of 2025 as part of the company’s broader global supply chain strategy to meet the growing demand for cross-border logistics solutions.
As part of that effort, the company will also expand its network of bonded and direct-mail warehouses. That would mark a significant expansion since JD Logistics—which is the logistics arm of JD.com and is also known as “JingDong Logistics”—currently operates nearly 100 bonded, direct mail, and overseas warehouses. Those facilities total about 10 million square feet in markets such as the U.S., Germany, the Netherlands, France, the U.K., Vietnam, the UAE, Australia, and Malaysia.
Specifically, JD Logistics said it is focused on expanding its presence in Europe and the U.S., establishing collaborative supply chain networks capable of delivering fulfillment services within 24 hours in several regions. In support of that, the company plans to increase its international cargo flights from China to destinations such as Malaysia, South Korea, Vietnam, the U.S., and Europe to enhance cross-border transportation services. It will also explore the development of self-operated transportation and delivery capabilities overseas.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
The clean energy transition continuing to sweep the globe will give companies in every sector the choice to either be disrupted or to capitalize on new opportunities, a sustainability expert from Deloitte said in a session today at a conference in Orlando held by the enterprise resource planning (ERP) firm IFS.
While corporate chief sustainability officers (CSOs) are likely already tracking those impacts, the truth is that they will actually affect every aspect of operations regardless of people’s role in a business, said John O’Brien, managing director of Deloitte’s sustainability and climate practice.
For example, regulatory requirements on carbon emissions are expanding in every region, which means that even if a specific company doesn’t have to change its own practices, it will almost definitely need to flex to accommodate its partners and suppliers as they track scope 3 emissions or supply chain practices.
Likewise, companies are starting to challenge the classic concept of “force majeure” events than can cancel service providers’ contractual duties due to unforeseeable weather events. As the new argument goes, extreme weather patterns increasingly occur in accordance with climate scientists’ forecasts, so those hurricanes and wildfires are in fact foreseeable after all.
But one strategy for coping with the cost of those changes is to mine the power of the data that most companies will soon need to collect as part of their evolution. Instead of simply tracking its trucks to trim their routes and emissions, a transportation company could use the same data to manage their maintenance and fuel consumption.
“The climate management transition is going to be a massive disruption, but with that comes massive opportunity,” O’Brien said from the keynote stage at the “IFS Unleashed” show. “Don’t waste compliance efforts just on compliance, use it to create new value. You’re collecting all that new data, so use it!”
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.