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Material Handling Overview The propane industry has long relied on the material handling market for consistent gallon demand while facing continued competition from electric, natural gas, fuel cell, and diesel. The material handling market has seen a shift in the warehousing operations over the last decade. Coupled with that shift is improved battery technology, which has increased competition for propane-fueled forklift products making industry outreach efforts to this market important to maintain and grow propane users and uses.
Distribution center and warehousing trends are continually evolving with increases in automation, expanded use of vertical space, lighter loads/lifts, fewer shifts, automation, floating inventory, and cross-docking all leading to more efficient operations. These warehouse trends will continue to change how forklifts are employed, and which physical characteristics are prioritized. To maintain market share, propane must evolve with the changes in the marketplace. In addition, there has been an ever-increasing pressure from regulators to reduce emissions. Government subsidies and investments have helped build momentum for some alternatives and industries. With electric being virtually synonymous with “green,” as well as the popularity of companies like Tesla, electric/battery popularity continues to grow. Besides being well-regarded as “green,” electric has benefited from sustained investments in technology development, as well as a highly focused sales force. It also has the capability to operate both outdoors and indoors.
Besides electric, propane also competes with diesel, CNG/LNG, and fuel cells. Propane has many advantages over the competition, including electric. Diesel, which powers Class 5 and 7 trucks, cannot operate indoors. CNG/LNG has half the run-time of propane. In addition, it suffers from slow refueling that is not easily accessible, ultimately impacting warehouse productivity. Fuel cells are costly and thus rely on grants and subsidies to fund the technology and infrastructure. Propane is not only a low-cost fuel compared to other internal combustion options, but it also has an overall 30% lower acquisition cost advantage. It even has the capability to run an 8-hour shift on one cylinder. The engines are safe, reliable, and maintain a consistent multi-shift performance. With the increased emphasis on low emissions, propane is already an environmentally-friendly solution compared to its competition. It has low emissions and a small refueling infrastructure footprint.
Emissions Comparison
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The propane industry is presently engaged in key research and development programs to make propane forklifts even more efficient with ultra-low emissions retrofits, hybrids, and on-board fuel storage and refueling. This has become especially important due to stiff competition from electric lift trucks.
United States Market Propane powers over a half a million forklifts in the United States, consuming 400-550 million gallons annually. It holds an 85-90% market share of Class 4 and 5 forklifts, although it also must compete against Class 1 forklifts.
The Market – Class IV & V
Where Propane Competes
The North America Market The North American retail market for Class 1 versus Class 4 and 5 shows Class 1 remaining steady, while Class 4 and 5 have fallen since 2011. Overall, internal combustion forklifts have shown a greater decline in market share when compared to all classes of electric forklifts. However, when comparing warehouse and counterbalance forklifts, the market share gap has been narrowing.
Source: Propane Education & Research Council
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The North American Market – Where Propane Competes
The North American Market – Internal Combustion v/s Electric Trend
The North American Market – Warehouse vs Counterbalance Trend
Source: Propane Education & Research Council
Source: Propane Education & Research Council
Source: Propane Education & Research Council
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US Factory Orders In 2019, propane made up about 31% of all US factory orders, while electricity grew its share to 65%.
All US Factory Orders by Year and Fuel
US Retail Shipments The entire forklift market has grown over a third since 2013, with Class 2 showing the greatest growth, followed by Class 1. Although Class 5 has stayed a bit lower than overall growth from 2013 to 2019, Class 4 has only grown 16% since 2013.
Yearly Change in Retail Forklift Shipments
Percent Change 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Class 1 14% 2% 7% 5% 5% 2% Class 2 15% 23% 8% 7% 0% 8% Class 3 11% 5% 9% 1% 5% -2% Class 4 12% 2% 0% -7% 12% -2% Class 5 21% 2% -7% 8% 19% -10% Total Shipments 14% 6% 3% 3% 8% -2%
US Retail Shipment Locations Almost two-thirds of US forklifts are shipped to PADDs 1 and 2; however, California and Texas lead all other states in shipments.
Source: Propane Education & Research Council
Source: Propane Education & Research Council
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2019 Retail Shipments by PADD
Top 10 Forklift Retail Markets’ Shipments in 2019
Where Sales are Happening
Source: Propane Education & Research Council
Source: Propane Education & Research Council
Source: Propane Education & Research Council
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Top US Industries for Class 4 & 5 Forklift Retail Shipments The top 10 industry sectors make up around 40% of Class 4 and 5 shipments.
SIC Description/Code % of Class 4 & 5 Shipments Truck Rental/Dealers (7700) 9% Equipment Rental; leasing (7359) 7% General Warehouse (4225) 5% Lumber And Other Build Materials (5211) 4% Miscellaneous Retail (5999) 4% General Production (3999) 3% Trucking Except Local (4213) 3% Industrial Machinery and Equipment (5084) 2% Arrangement of Transportation of Freight and Cargo (4731) 1% Services Incidental to Transportation (4789) 1%
Ports and Terminal Tractors Recent market research finds favorable opportunities for propane in the port and terminal application areas. With propane already being used to power stationary and mobile power solutions, some port/terminal yard trucks, light-duty vehicles and forklifts, terminal tractors could provide a viable opportunity for propane. The production of terminal tractors is expected to grow both globally and in North America. Propane’s on-site refueling infrastructure is both low-cost and non-toxic, furthering its benefits.
Unfortunately, propane’s awareness among decision makers may be low, due to the lack of current propane applications in this market. Like in all segments, propane will need to compete with regulators’ growing need to promote electric everything. Although propane would be a natural fit for the terminal tractor market, it still must overcome some challenges.
2019 Regional Market Share of Production Terminal Tractor Units
Source: Maia Research Analysis
Source: Propane Education & Research Council
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North America Terminal Tractor Production Value
Global Production of Terminal Tractor Units by Fuel
Source: Maia Research Analysis
Source: Maia Research Analysis
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Appendix Competitive Analysis
Competing Energy Strength Weakness Differentiation Electric Zero site emissions and
low, to no, cost factored in for fuel or energy needs in most cases.
Can be extremely costly in terms of acquisition, recharging space requirements, etc. LiOn battery introduction has been very high cost and challenging. Lots of unanswered questions about battery disposal, recycling, etc.
Zero emissions and no fuel costs are the key selling points.
Diesel Easy refueling and a large product mix for outdoor, port, engine, and heavy-duty applications.
Tier 4 pressures and costs, fuel contamination, increasing focus on diesel emissions, cannot operate indoors, fuel price fluctuations (local, regional, national).
Viewed as the standard, especially in the high torque and heavy-duty applications (i.e., rough terrain, ports, etc.)
CNG/fuel cell Lots of incentives and grants to push adoption in past.
Extremely costly at acquisition. Usability and refueling concerns with CNG. Limited run-time in most applications.
Low emissions alternative to LPG and electric.
Top Data-Based Messages 1. Propane forklifts have 30% lower capital costs than comparable electric-powered forklifts. 2. Propane-fueled forklifts produce up to 76 percent fewer sulfur oxide (SOx) emissions than
electric-powered forklifts. 3. The life expectancy of a propane cylinder is three times longer than the life expectancy of an
electric forklift battery and extends beyond the typical lifespan of a single forklift. 4. Best-in-class propane forklift engines produce 97% fewer hydrocarbon and nitrogen oxide (HC +
NOx) emissions than comparable diesel forklift engines. 5. Propane-fueled forklifts can have up to 20 percent lower annual fuel costs compared with
diesel-fueled forklifts.
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