Any business that operates a warehouse knows it needs equipment to move inventory in and out of it and to keep the space organised. The question that arises then is whether the business should buy new equipment, purchase used warehouse equipment, or lease what it needs.
The best option for acquiring the warehouse equipment a business needs depends on several factors specific to every business. However, we can examine the pros and cons of each option to give you a place to start if you need to pick one of these three choices.
Buying New Warehouse Equipment
Buying new is the first option many business owners consider when they need equipment. The primary advantage of buying new is getting access to new technology. The latest pallet trucks, forklifts, scissor lifts, and other warehouse equipment have new features that improve their safety, make them easier to use, and provide additional functionality workers may need.
The second benefit is reliability and warranty. New equipment is less likely to require immediate repairs and comes with warranties that handle them if they arise. This gives owners peace of mind knowing they can use the equipment without fearing they will incur repair costs too soon.
Business owners also get different customisation options. They can customise new equipment so that it perfectly suits their specific needs and use cases.
Disadvantages of Buying New Warehouse Equipment
The main disadvantage of new equipment is that it requires a substantial initial investment. Even though businesses can source loans to buy what they need, they still have to pay the amount and additional interest.
New equipment also often has significant waiting periods. It is common for businesses to wait several weeks or months to receive the equipment and this period can increase if it is highly specialised and complex. The business can lose time and potential revenue if it needs the equipment immediately or is in the middle of expanding its services.
Lastly, new equipment depreciates very quickly. If you buy new equipment and wish to sell it a few months later because it no longer fits your needs, you will find the selling price to be much lower than the buying price.
Buying Used Warehouse Equipment
Used equipment is typically cheaper than new equipment. You can find high-quality used pallet trucks, forklifts, and other warehouse equipment at a fraction of the price of new ones. The realised savings free up capital that you can use for other needs or to invest in additional equipment.
Used equipment is also often readily available, and businesses can acquire it quicker than new equipment. You can check online to find reputable businesses with what you need and have them deliver it in a few days. With new equipment, you have to wait for it to be manufactured, configured and then shipped out and, as we have seen above, that can take a lot of time.
Warehouse equipment is built to last a very long time. While many people do not think so, it has been proven numerous times that well-maintained used equipment can be nearly as dependable as new equipment. This is especially true for equipment like pallet racking equipment and forklifts from established brands known for high-quality construction.
If you cannot find a specific equipment configuration or discover that a piece of equipment is no longer being manufactured, you will likely find what you need in the used market. For this reason, used equipment provides a much wider choice and makes it easier to find exactly what you are looking for.
Lastly, used equipment has already undergone the initial phase of depreciation. This means its value will not decrease as rapidly as brand-new equipment. This can be a wise financial decision if you don’t anticipate needing the equipment for a long period.
Downsides of Used Warehouse Equipment
Used equipment typically requires repairs much sooner than new equipment. However, this is not always the case, especially if you buy from reputable sellers who complete thorough checks and repairs before buying it.
Some used equipment presents safety concerns, especially if it is not from a reputable seller. Always do a thorough inspection to ensure all warehouse equipment you buy is safe for your workers and anyone who will be near it.
Leasing Warehousing Equipment
If you do not want to buy new or used warehouse equipment, the last option is leasing it. Leases spread the cost of the equipment over a long period, meaning they do not require a significant initial investment.
Businesses can plan for the monthly payments and add them to their recurring expenditures, and then take advantage of options like lease to buy.
Another benefit of leasing is upgrade options. Businesses can lease equipment with the functionality they need immediately and then upgrade it at the end of the lease period. Doing this can be advantageous if the business already had plans to buy the specialised or upgraded equipment but did not have the financial overlay to buy it outright.
The Disadvantages of Leasing Warehouse Equipment
The main disadvantage of leasing is that the business does not own the equipment and has to return it at the end of the lease period. There may also be restrictions on how workers can use the equipment. The leasing company would not want to incur significant repair costs when they get the equipment back, so they want businesses to adhere to strict usage requirements.
The business might also not be able to modify the equipment to meet specific needs. Rather than leasing then making modifications, it would be better to acquire equipment with the modifications already installed.
Lastly, the total cost of the lease can be higher than buying a new or used one. Similar to loans, the leasing company can charge a higher monthly cost than the business would have incurred if it bought the equipment.
Businesses that need warehouse equipment have to carefully weigh their options to ensure they enter into favourable acquisition arrangements. These could be buying new or used or leasing the equipment they need as they need it. Each has its pros and cons that they should weigh carefully.
