The Hindu Business Line : Fuel price hike: Too early to study impact, say transport cos

THE large road transport companies are of the view that the exact impact of the current hike in fuel prices cannot be assessed immediately. For several reasons.

First, the State-level levies vary from one State to another and the reports from different States in this regard will take time to reach. More important, the burden of the hike cannot always be passed on to the consignors in toto, as there are different types of contracts, some of which may not have the escalation clause.

The spot market rates, determined by the free interplay of market forces, too do not react to the fuel price hike almost instantaneously.

The transport companies are not prepared to buy the theory that the widening of the Golden Quadrilateral has reduced the consumption of fuel per tonne km. This is because the development of the network across the country has not been uniform. In some parts it is good and in others, it leaves much to be desired.

Also, the inter-State barriers complete with check-posts have not been dismantled everywhere, thus limiting the possibility of smooth and uninterrupted movement at a reasonably good speed so essential for low fuel consumption. The consumption of fuel per tonne kilometre has dropped only in those cases where large capacity modern vehicles are being used for transportation, it is asserted. In some cases, the transport companies have benefited from low interest rates.

Conceding that fuel price hike is inescapable in a situation where the international crude prices are spiralling, the transport industry sources draw attention to several problems facing the industry. In the past six years, diesel prices have jumped by 150 per cent but the freight by only 35 per cent or so. Since fuel cost accounts for nearly 50 per cent of the total cost of a transport operator, the freight increase, it is estimated, should have been at least 75 per cent during the period. However, that did not happen. Other areas of concern are adulteration and overloading. The current price hike, it is feared, will only add to these problems.

The fuel price hike means little to individual transport operators owning one or two vehicles. This is because they have no control over the freight rates dictated by the large companies and their brokers.

They do not get to know what the consignors are quoting by way of freight. In most cases, what the individual transport operators get by way of hire charge is much lower than what the consignors pay as freights. They therefore urge the Government to work out a mechanism by which they can free themselves of the clutches of the big companies and their middlemen, and any freight hike gets reflected in higher earnings for them.

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Fuel price hike: Too early to study impact, say transport cos