Logistics

Economic slowdown adds to truckers’ woes

T E Raja Simhan Chennai | Updated on September 06, 2019 Published on September 06, 2019

Nowhere to go As many as 60 per cent of the one crore trucks in the country are idle due to non-availability of cargo to carry   -  Special arrangement;Special arrangement

Companies scramble for loads amid excess capacity and poor freight rates

The economic slowdown has hit truckers so hard that many are unable to utilise their vehicles due to the absence of cargo. They fear that if this situation persists, it will become difficult for them to pay their EMIs and chances of their vehicles getting seized by finance companies is increasing by the day. With excess capacity in the market and poor freight rates, some truckers are carrying goods at a loss to keep their vehicles running.

As many as 60 per cent of the one crore trucks in the country are idle due to non-availability of cargo. It is not surprising that commercial vehicle manufacturers such as Ashok Leyland and Tata Motors have reported a sharp drop in sales by 70 per cent and 58 per cent, respectively, in August as truckers have put off their purchases in the last two quarters.

Rentals under stress

Truck rentals have been under deep stress since November 2018, and have dropped by 15 per cent to 17 per cent, said a report by Indian Foundation of Transport Research and Training.

The truck industry works on demand and supply. At present, there is excess capacity in the market, and a decline in cargo to be transported. This means vehicle owners do not have any say in the freight rates. Whatever a client offers has to be accepted by owners to keep their vehicles running, said SP Mohan, a truck operator in Namakkal.

Echoing a similar view, MR Kumaraswamy, President, State Lorry Owners Federation of Namakkal, said that truckers are worried that things are getting out of control, and a ‘panic’ situation is setting in. Trucks are idle for longer periods. In a normal situation, a vehicle is idle for 50 per cent of the time as it takes time to find cargo at the destination. However, today, a vehicle is idle for over 70 per cent and some don’t find any cargo, he said.

Axle limit

Kumaraswamy also blamed the government’s decision to increase the axle limit from July 2018. If a truck is carrying 20-25 per cent more than its stipulated norms, other trucks are deprived of the opportunity to carry cargo.

Echoing a similar view, Bal Malkit Singh, a Mumbai-based transporter and Chairman-Core Committee, All India Motor Transport Congress, said that with the spurt in infrastructure spends by the government, there was a shift to vehicles of high tonnage and e-commerce provided the impetus for LCVs. However, the slowdown in demand resulted in over-capacity.

“The present scenario is devastating. The government is oblivious to the plight of the crores of people dependent on the truck industry. The truckers are unable to pay their EMIs and are scrambling for loads at whatever freight rates, even at a loss. The government is more concerned with the growth of auto manufacturers but there is no point in offering incentives to buy trucks when there is no demand,” he added.

Truckers are hoping that the ensuing festival season followed by good agricultural produce due to good monsoon will boost movement of goods, and help the industry survive.

Published on September 06, 2019
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.