Goods to turn dearer with truckers set to pass on fuel price hike

Movement of goods by road will become costlier by 5-7 per cent following the Friday hike in diesel prices by Rs 3 a litre. This will have a impact on the prices of all commodities.

The expectation of a price rise sparked country-wide protests on Saturday. Not only the BJP and the Left, but even UPA allies, the Samajwadi Party and the Trinamool Congress, slammed the Government's move to raise prices of diesel (by Rs 3/litre), kerosene (Rs 2/litre) and LPG (Rs 50/cylinder).

In Delhi, BJP activists marched towards Parliament, terming the Government as “insensitive to the sufferings of the common man and imposing economic emergency on the country”. The CPI(M), the CPI, the RSP and the Forward Bloc organised protests in many States. In a joint statement, the four Left parties said the withdrawal of 5 percentage points in customs duty on crude oil imposed last year “shows how such taxes are levied by the Centre to raise revenue and this is the main cause for the high prices of petroleum products”.

Freight Pass-on

Truckers and fleet operators across the country say they will pass on the increase in fuel costs to their customers. Besides the fuel costs, increase in inputs and operational costs such as tyres and spares, insurance premium and toll rates can push up the freight rates by another 2-3 per cent, said transport operators.

The Government has raised prices of diesel, kerosene and LPG to help reduce the burden of under recoveries of oil companies. The last increase in diesel price (by Rs 2 a litre) was in June 2010. A month ago petrol prices were hiked by Rs 5 a litre.

A seven per cent increase will see the freight rate going up by about Rs 3,700 to Rs 57,400 for a 9-tonne truck for a Delhi-Mumbai round trip. “I expect freight to go up by 5-7 per cent immediately. Fleet operators have to pass on the increase in fuel price. Already tyre and spare prices have gone up, increasing the operational cost,” said Mr Areef Patel, Executive Vice-Chairman, Patel Roadways Ltd, a leading fleet operator.

The direct freight impact for kg would be 35-40 paise, said Mr Ashok Shah of the Mumbai-based V-Trans, which has a fleet of over 250 vehicles.

Truckers plan strike

The All India Motor Transport Congress, one of the two main truckers' bodies, said that the increase in freight charges could be 7-10 per cent. taking into account also the rise in other input costs. The organisation may call for a strike from July 1 to protest against the increase in fuel prices. It will take a decision on this on June 27.

However, the All India Confederation of Goods Vehicle Owners' Association, the other truckers' organisation, said that a strike is just a form of “blackmailing the Government”. Instead, it wants the State governments to ensure a minimum freight rate for truckers that will be indexed against the diesel prices.

In Gujarat, truckers plan to immediately increase freight rates by five per cent, said Mr Mukesh Dave, Secretary, Akhil Gujarat Truck Transport Association. “We will consider further increase in the next couple of weeks,” he said.

The freight increase in Tamil Nadu will be Rs 1 to Rs 1.50 per km per 9-tonne truck, according to Mr P. Mohan, a truck owner in Namakkal, the hub of truck industry in South.

According to Indian Foundation of Transport Research and Training, the weighted impact of the diesel price hike would be around four per cent, though truck unions and parcel freight transport associations may increase charges by 10 per cent on different trunk routes.

Margins of logistics service providers such as Transport Corporation of India, Safexpress may take a hit in the short run as they have long-term contracts.