Logistics

As Gujarat truckers body tells members to hike rates, experts raise restrictive practice concerns

Mamuni Das New Delhi | Updated on February 18, 2021

KMCTWA has asked all its members to increase freight rates or face a boycott   -  The Hindu

Rising diesel prices are driving up costs and this may have a cascading impact on logistics costs

Freight rates of container trucks in Gujarat may go up 10 per cent from February 21, in the backdrop of rising diesel prices.

The Kandla Mundra Container Transport Welfare Association (KMCTWA) asked its members to increase the freight rate which may be passed on to users like exporters and importers, effectively adding to the cost of export and imports. Gujarat has large ports like Mundra, Kandla and Pipavav.

There is a ₹3,000-5,000 increase in cost per trip due to unprecedented increase in diesel prices, and spare parts, tyre and maintenance are 20-30 per cent dearer, the KMCTWA has said in a letter.

The association has called for a “partial” increase in transport freight rates with diesel prices touching an all time high of ₹84 a litre, in the letter dated February 13.

“When one association calls for increase in freight rates, all other truckers associations also do the same – formally or informally. This is likely to increase freight rates from Gujarat,” SP Singh, Senior Fellow at New Delhi-based Indian Foundation of Transport Research and Training (IFTRT) told BusinessLine.

Comply or face boycott

Despite the market being highly competitive, the association has asked all its members to increase frates, or face a “boycott”. “We request every stakeholder (industry owners, importers, exporters, freight forwarders, custom house agents, coastal and multi-modal operators, booking agents) to cooperate with its members for implementation... any non-cooperating stakeholder or members will be boycotted and blacklisted by the association,” KMCTWA has said in the letter.

“The executive (members) committee has unanimously decided to partially increase the freight rate by ten per cent with effect from February 21,” KMCTWA has said.

Meanwhile, IFTRT, a transport research body, has urged authorities including Competition Commission of India (CCI), Road Ministry and Shipping Ministry, seeking suo-motu action, on the association diktat to all members.

Restrictive practice?

“There may be merit in hiking costs. But, in a competitive market, should associations be telling members to increase the price or face boycott? Consider a television. One company sells its product at a premium while another sells its products at a lower price. Can an industry body ask all the players to sell the TV at a higher price?” asked Singh.

It may be noted that years ago, IFTRT had approached CCI against a similar move by the All India Motor Transport Congress. Prior to that even the erstwhile Monopolies and Restrictive Trade Practices Commission had barred the AIMTC from asking truckers to increase rates.

Published on February 17, 2021

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