Leadtimes are extended, prices remain stable

By Jianfeng Pei -- Purchasing, 10/19/2000

Demand for rack and shelving products is so strong this year that suppliers have problems keeping up with all the orders. Customers are facing longer deliveries. The good news is that prices will not increase with demand.

This year is one of the best years for the rack and shelving industry. The booming market keeps suppliers very busy. Many manufacturers are using multiple shifts, but they still can not meet all the demand.

"The market will grow more than 6% this year," says Weiker Kline, product manager, Penco Products, based in Oaks, Pa. "The strong economy, robust industrial growth and increasing capital investment all help boost demand."

Ken Smith, marketing communications manager, Lista International, based in Holliston, Mass., expects the market to increase 6%-8% this year. He attributes the growth to healthy consumer spending and strong manufacturing activities.

E-commerce and the fast emergence of dot.com start-ups are also a factor contributing to the surge in demand for rack and shelving systems. With e-commerce, customers are demanding faster deliveries from suppliers to help reduce inventories. To meet this challenge, many manufacturers and distributors are building new warehouses or renovating their existing ones, which is creating new opportunities for material handling and storage equipment.

In spite of the soaring demand, prices for rack and shelving systems are expected to remain stable. Major costs of manufacturers are from raw materials and labor. Although these costs are going up a little bit this year, most suppliers have no intention of raising their prices.

"Prices will keep constant," says Kline of Penco. "It is a very competitive market and we have no plan to increase our prices."

Extending leadtimes

Customers will not pay higher prices for rack and shelving systems, but they have to wait longer for delivery of these products. Manufacturers are running at full capacity, but they still can not deliver their products as fast as before.

The normal leadtime for rack and shelving systems was about three weeks last year. It now takes four to five weeks for customers to get their products, according to suppliers.

Don't expect leadtimes to be shortened if demand remains strong. Most manufacturers have no plans to expand their capacities, even though they are so busy and can not meet all their orders at this time.

"The industry has been burned several times in the past," says one supplier. "Although demand is very strong at this time, we are not sure what will happen in the future."

What's new?

Steel King, based in Stevens Point, Wis., offers customized shipping of racks and containers which provide shipping protection and reduce the need for disposable packaging materials. Such systems are designed according to customers' shipping requirements. If dunnage is necessary, Steel King will customize the part dividers made of a variety of materials, including foam, rubber and plastic, to be integrated into the racking systems to reduce in-transit damage.

Shipping racks are used for closed-loop distribution, intra-plant parts transport and warehousing. They can be designed to be adjustable or changeable to handle future part requirements, allowing the original shipping racks to be used.

Market at a glance