Diesel price drop: Truck rentals may go down by 2.5-3%

Moving goods by road may get cheaper by 2.5-3 per cent, thanks to the cut in diesel prices. But transporters rue the government’s move of not passing over the entire drop in international crude prices to the market so far.

Truck rentals are expected to get cheaper by 2.5-3 per cent over the next few days with the drop in petrol and diesel prices by over Rs 2 a litre, according to the Indian Foundation of Transport Research and Training (IFTRT), a body that tracks the sector.

“The reduction in diesel price is meagre…The expectation was for a drop of Rs 4-5 a litre. While it will take a few days for the drop in fuel prices to reflect on rentals, we expect the freight rates on key trunk routes to go down by 2.5-3 per cent,” SP Singh, Senior Fellow, IFTRT told Business Line.

Since October 17, the time from when the prices started coming down, the rentals have dropped by 8-9 per cent, said Singh.

Many customers of the organised transporters will automatically see a drop in rentals as the transporters have long-term contracts with them.

“We agree that freight rates should come down. But, it will depend on the market conditions. We have to keep in mind that other costs such as lubricants, automobiles, tyre prices have also gone up….If the economy picks up, and the demand goes up, the price may not see sharp drops,” said Naveen Kumar Gupta, Secretary General, All India Motor Transport Congress. Fuel costs account for 45 per cent of the operating cost for a transporter, said Gupta.

Gupta expressed concerns on the Government move of not passing on the benefit of drop in fuel prices entirely to the users despite the Government move of diesel deregulation.

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