The Hindu Business Line : Truckers face demand slowdown; rentals drop 8%

“The reduction in truck rentals may be benefiting some big corporates but the general class of manufacturing and trading community continues to pay high retail freight charges.”

Suresh P. Iyengar

Mumbai, Jan. 3 The marked slowdown in import-export activity and sharp drop in the manufacturing sector seem to have taken a toll on truck rentals.

The rentals for a round trip between Delhi and Chennai has dipped seven per cent to Rs 57,000 from Rs 61,000 between December and January, while between Delhi and Mumbai, it was down 7.02 per cent to Rs 33,100 from Rs 35,600.

“The drop of 5 to 8 per cent across the board in truck rentals outpaced the 5.75 per cent cut in diesel price (Rs 2 per litre) as industry slowdown reduces cargo offerings,” according to the Indian Foundation of Transport Research and Training (IFTRT) survey. The across-the-board production cut by the big corporates and small and medium manufacturing units has also adversely impacted trucking operations.

“National truck fleet utilisation has dropped by an unprecedented 30-35 per cent,” said Mr S.P. Singh, Senior Fellow and Co-ordinator, IFTRT.

Diesel prices

Diesel prices were reduced from Rs 34.80 a litre (ex-Delhi) to Rs 32.80 a litre on December 6, effecting a reduction of 5.75 per cent in operating cost for a truck.

“The full round-trip by the truck operators on trunk routes was taking double the time than the normal operational time as the waiting period at the factory gate for providing cargo has gone up substantially in the last four months,” said Mr Singh.

In order to maintain the revenue level to meet the loan repayment and other variable expenses such as diesel and tyre, truck operators have increased the practice of loading more than the prescribed limit and thereby suppressing the demand for trucks further, which has lead to a 25 per cent drop in gross revenue on a monthly basis, he added.

Retail biz unruffled

While the full truck load rental has dropped in the last few months, the retail parcel goods booking companies and logistic firms booking door delivery have not reduced their parcel freight rates. However, volumes have dropped between 20 to 25 per cent since July.

About 70 per cent of the retail and part cargo consignments are provided to SMEs which do not enjoy much bargaining power with transport companies. There are 2.75 lakh goods booking firms and their agents in the country.

Freight rates are generally determined by the frontline 400-500 transport firms located in various trading and manufacturing centres in the country, said IFTRT.

“These transport firms and agencies control the supply of cargo to 4.3 million trucks in the country.

“Hence, the reduction in truck rentals may be benefiting some big corporates but the general class of manufacturing and trading community continues to pay high retail freight charges,” he said.

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Truckers face demand slowdown; rentals drop 8%