The complexity of forklift tire distribution makes it a very competitive market.
It’s no secret that manufacturers in many segments of the industry are starting to go direct and bypass the distributor. Particularly as the economy has downsized, the distribution channels have become pressured as manufacturers go into survival mode. In the tire market, this seems to be even more pronounced as new competitors emerge.
This story came about based on conversations with MHEDA members about increased competition in the forklift tire market. Tire manufacturers are concerned, while distributors seem to shrug it off as a way of life in today’s environment. Competition is competition is competition.
One of the newest competitors to enter the marketplace is Ameriquest Transportation Services. The company is experiencing major success and was recently named one of Inc. magazine’s fastest-growing private companies. According to Scott Grushoff, Ameriquest vice president and general manager, Ameriquest describes itself as a “member-based group purchasing organization that helps customers procure everything they need for their fleets, which includes warehouse equipment, new trucks, parts, tires, lubricant and other material handling equipment.” When Ameriquest’s clients started requesting a one-stop shop, the company made the decision to enter into the fleet service and management side of the material handling business.
What does this mean for material handling distributors? Well, like much of the tire market, it depends on whom you ask. When surveyed by The MHEDA Journal, many MHEDA members were unaware that Ameriquest was even involved in this segment of the market. Ameriquest customers include some of the largest material handling users in the world, which doesn’t make them a competitor, at least for one distributor, who says, “Our average customer uses less than 20 forklifts, whereas a company like Ameriquest typically targets customers with many more users than that.”
On the other hand, another distributor sees Ameriquest’s competitive presence as a little more troublesome. “A third-party fleet management company can force every distributor to compete against each other to do the service work. It puts downward pressures on the margins.”
Among manufacturers, there is a higher level of concern about the intention and presence of new competitors. One tire manufacturer says, “When wholesalers sell direct to end-users, it undermines the basic structure of this industry. You need to do everything you can to foster good strong distribution channels because in that process, the customer benefits most.” But as pointed out by other tire suppliers, “I don’t really understand why people would be complaining new competition. They aren’t doing anything that any other dealer can’t do. They just buy parts and tires and sell them to the end-user. A distributor buys parts and tires and sells them to the end-user. I find it odd that they would be a cause of consternation.”
However, in the next breath, the same supplier says, “The advantage that Ameriquest or any other independent has is that they can sell their customers cheaper parts because they don’t represent an OEM.”
So it comes down to how to handle the new competition. “Whether it’s tires, bearings, trucks or whatever, people are feeling some real frustration with what’s going on out there when new people try to wedge into the distribution channel and don’t support the old model,” says one tire manufacturer. “There is a lot of frustration and emotion out there. It disenfranchises people who have been longstanding partners.”