Thanks to recent changes in the LBM industry, times are good for the racking, trucking, and forklift markets, where demand is consistently rising. The products' popularity has been reflected, in part, in higher spot rates for trucks and longer expected turnaround times for racking systems.
The warehouse racking market overall is steadily growing, with Market Research Reports predicting the market will grow around 5.5% over the next five years. Mobilized pallet racks, too, have helped reduce storage-space costs while allowing greater accessibility to stored items, improving efficiency. Other developments in racking, including more storage density, have also benefited the market. The construction industry has largely driven the sector's growth, according to market research conducted by Persistence Market Research.
After being late adopters of major trends in the racking industry, LBM dealers have begun using larger covered storage units to protect inventory from weather damage, vertical-storage systems, and rack-supported buildings. LBM dealers are also paying more attention to layout efficiency. Vertical storage systems offer greater efficiency than traditional, horizontal setups, while better LBM storage-facility layouts decrease handling and increase safety.
Travis Darnell, president of CT Darnell and Sunbelt Rack, says the racking market has responded to recent changes in LBM, such as the evolution of decking materials and the rise of engineered woods. These diverse products have increased the number of stock-keeping units demanded by LBM dealers and the racking market has answered. Broader inventory and quicker turnaround times have necessitated racking systems that can handle greater SKU variety while also reducing unnecessary handling and safety liabilities.
One of the biggest roadblocks in the racking market, according to Darnell, is the limited amount of time many dealers have to give to new projects.
"The lumber dealers are so busy, it's hard to get them to devote the time to their [racking] projects because they're focused on running the day-to-day of their companies," says Darnell, who also notes that the long process involved in installing racking systems could be problematic for LBM dealers on tight schedules who want projects done quickly.
"Unless you're going with something that's a stock product, which most lumberyards don't use, they need to allow for realistic time lines on their projects," Darnell says. In the current racking market, completion times for custom racks are three to four months, depending on permit requirements. Darnell says the market for racks is "very strong." The 25% steel tariffs implemented earlier in the year disrupted prices for racking systems slightly, but they've now stabilized.
Trucks and Forklifts
Rising demand is also affecting the trucking and forklift spaces. Spot market loads for flatbed trucks are up significantly compared with last year, but the budding driver shortage means the rates that LBM dealers face continue to rise. Market estimates suggest a current shortage of approximately 50,000 drivers in the sector, and the trucking industry is having difficulty attracting drivers.
Amid the driver shortage, flatbed spot rates are up 11.8% versus last year, while contract rates are 11.3% higher, according to DAT Solutions. Costs may continue to rise as several manufacturers, including Volvo, have begun efforts to product electric trucks. The costs of these newer technologies will likely be shifted to LBM dealers as long as the trucking markets remain strong.
The forklift market, too, is seeing growing demand, and technological developments such as electric models—available from Toyota, Mitsubishi, Hyster, and Raymond, among other manufacturers—likely mean prices, as well, will increase. According to Dublin, Ireland-based research firm Research and Markets, although the construction industry was slow to adopt electric forklifts, many LBM dealers are purchasing, replacing, and updating these models as improved and more-efficient options become available.