If I asked you how much each of your forklifts costs you per hour, could you tell me? Could you figure it out in 5 minutes?
If not, you may be losing money.
We’ve talked about forklifts needing maintenance in the newsletter before. It’s a necessary procedure, and can actually save you money over the life of the forklift.
Cost per Hour is a way to collect all of your fleet’s maintenance costs into one easy-to-read value. It helps fleet managers determine how healthy their forklifts are, and which forklifts are approaching end-of-life.
Factors Involved in Estimating Cost per Hour
Typical operation time for a forklift is 1,500 hours per year. Throughout the year, each forklift requires maintenance. All of the relevant maintenance tasks are factors when calculating Cost per Hour.
- Forklift Type
- How long you want to keep it in service
- Number of hours used per year (1,500 average)
- Regular Planned Maintenance
- Repairs/Replacement Parts
- Labor involved in service & repair
So what’s a reasonable Cost per Hour? $1/hour? $2?
How to Calculate Cost per Hour
When you get a brand-new forklift, Cost per Hour is almost $0 for those first few months (excluding fuel, of course). Then you have planned maintenance, eventually a little labor, and so on. The costs add up fast.
To see how fast, let’s do some basic calculations. These will use a new LPG forklift as example.
Cromer recommends Minor Planned Maintenance every 150-200 hours of use. The service costs $89.99 (not including part replacements). If average use per year is 1,500 hours, the first year’s Cost per Hour would work out like this:
$89.99 x 7.5 (Done every 200 hours) = $674.92
Divided by 1,500 hours = $0.45/hour
Year 2 will need a Major Interval Service, which come up every 2000 hours of use and cost $1399. You might see wear-and-tear on your tires, but we’ll leave that off for now.
$629.93 (7 Minor Planned Maintenance services) + $1399 = $2,028.93
Divided by 1,500 hours = $1.35/hour
Year 3 will see another Major Interval Service, another round of Minor Planned Maintenance services, and a new set of forklift tires. Let’s also assume you have to replace the forks, since at this point they’re worn out.
$2,028.93 + $800 (Tires) + $400 (Forks) = $3,228.93
Divided by 1,500 hours = $2.15/hour
See how fast it’s going up? (We didn’t even account for fuel, by the way.)
In 3 years, one forklift can rise in cost from under $1/hour to approaching $2.50/hour. You might think that’s just a small expense…not really worth tracking. But such a rise actually means your cost for that forklift went from $1,500/year to almost $3,500/year.
That's per forklift!
Cromer recommends that when maintenance Cost per Hour passes $4/hour, it's time to retire the truck and replace it.
The Solution: Track Your Costs and Know When to Replace Forklifts
If you’re monitoring Cost per Hour, you’ll see when it starts to rise too high, damaging cost efficiency. If you’re not monitoring it, you may wind up sinking lots of money into maintaining an aged forklift fleet. Only to lose hundreds of productive hours and thousands of dollars.
It actually takes very little time to monitor forklift Cost per Hour. All you really need are these two steps.
- Designate someone to track your maintenance costs. They should keep track of all the factors noted above.To a large degree, your Accounting Department already does this. You can start out by simply asking for reports from them on the forklift costs.
- Evaluate your trucks yearly. Recalculate Cost per Hour each year, using the past year’s maintenance numbers.When the costs to maintain a forklift are greater than the value it provides, it’s time for a replacement. (We do take care of recycling end-of-life forklifts.)
Forklifts Age Too. Knowing Cost per Hour Helps You Retire Them Safely.
Cost per Hour will naturally rise over the life of the forklift. It’s an inescapable part of aging forklifts. Good maintenance and proper use will keep Cost per Hour low for a long time.
Just be careful not to push your fleet too far. We’ve encountered customers with forklifts at a Cost of $5/hour! These forklifts rattled and jerked all day long, hurting their drivers and endangering co-workers. They were working way past retirement.
Don’t make that mistake. Track your forklifts’ Cost per Hour.
Until next month!
Marshall Cromer, The Forklift Boss
Cromer Material Handling