Companies

Higher payload norms, demand slump push CVs into slow lane

Twesh Mishra New Delhi | Updated on September 05, 2019 Published on September 05, 2019

Muted consumption growth and revised norms to increase the freight capacity for trucks have driven down the demand for commercial vehicles in the country.

This, coupled with a manpower crunch for skilled drivers and lesser-than-anticipated capacity utilisation, is exerting pressure on commercial vehicle sales.

Large infrastructure companies outsource their transport requirements to contractors. They do not directly buy commercial vehicles such as trucks despite major requirements.

Muted demand

“There is a marked slowdown in consumption growth that has driven down the demand for commercial vehicles. On an average, the vehicle sales grew in double digits for over a year in anticipation of consumption growth. But that did not happen and that is why there is an under utilisation of existing commercial vehicle fleet in the country,” said SP Singh, President, Indian Foundation of Transport Research and Training (IFTRT). “Of the nearly 90,000 car and motorcycle carriers (trucks used to ferry two- and four-wheelers), only 60,000 are estimated to be plying right now.

This is because of a demand slump for passenger vehicles. Similarly, LPG tanker operators were anticipating cooking gas demand to grow significantly as new connections were disbursed under the Ujjwala Scheme.

 

There are around 45,000 LPG tankers right now in the country that were anticipating an average of three trips per day. But they are now making an average of just 1.5 trips a day as the demand did not take off as expected,” Singh told BusinessLine.

Payload capacity

Mukesh Dave, General Secretary at the Akhil Gujarat Truck Transport Association (AGTTA), said that the revised payload norms can also be a factor for lower sales.

He said, “The Centre increased the payload capacity for commercial vehicles by 25 per cent last year. This allowed lesser trucks to meet the requirements.

There is also a shortage of drivers that deters one from buying new vehicles. This coupled with a slowdown in demand growth has affected purchasing requirements of new vehicles.”

In July 2018, the Ministry of Road Transport and Highways notified an increase in permissible truck axle load.

The Centre assessed that this amendment will increase the carrying capacity of goods vehicles by about 20-25 per cent and lower logistics costs by about 2 per cent.

Analysing the impact of this decision, a CRISIL report had said, “A good year sees a growth of billion tonne kilometre growth of 7-8 per cent. Hence, a 20-25 per cent increase in freight carrying capacity would be equivalent to three years of incremental freight demand.”

Published on September 05, 2019
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