Pandemic takes a toll on truckers, loan repayments slow

While delays in repayments of truck loans have started, a clear picture on how many will actually become bad loans will emerge in three months, say transport sector executives.

Trucks are lying idle due to lockdown in various States. The All India Motor Transport Congress (AIMTC) said its members are facing difficulties in getting relief on loans and the transporters union is pushing for a blanket loan moratorium for truckers, a large chunk of whom own five-ten trucks.

Business is hit for many with a drop in cargo availability leading to lower rentals. Truck operations have become challenging as the second wave of Covid-19 has spread to rural and interior parts of India, fuel prices are soaring, and drivers have left for their villages, note experts.

According to the Indian Foundation of Transport Research and Training estimates, loans on up to 1.5 lakh vehicles may go into default.

‘Repayments slow down’

“We don’t expect over 1.5 lakh vehicles (out of total 55 lakh) to default this year,” SP Singh, Senior Fellow, IFTRT, said. There may be cases where even truckers who can repay are holding back as they expect a loan moratorium from the Reserve Bank of India. The slowdown of 2019 saw about 45,000 trucks getting repossessed, that was reflected in 2020, said IFTRT, based on its study of drop in truck sales in 1984, 1998, 2008, 2012 and 2019.

“With transport operations down by almost 50 per cent as of now, there are delays in repayments. Trucks operating within a State or within a district are less likely to be hit as also older trucks with most of the loan paid off will not be hit. But, trucks that are 1-2 years old, which operate on long distance segment will suffer as they face loan repayments of ₹40,000-60,000 for a medium-to heavy-commercial loan of five to six years,” explained Singh.

Drop in cargo

AIMTC estimates the drop in the cargo availability to be much steeper at 70 per cent.

“This March, a lot of BSVI vehicles were sold, as companies wanted to book vehicles before the financial year end, and also make the most of depreciation benefits (vehicles sold in March can claim 40 per cent depreciation benefits over April-September). Trucks – which were sold with the driver cabin and chassis – were at the fabricators to be fitted with the truck bodies. By mid-April, several States had started seeing Covid-19 situation deteriorating and leading to lockdown and regional transport offices closed. So, trucks could not be registered,,” Singh of IFTRT said.

While truck rentals fell sharply in April and May in the open truck market, the fall was not that accentuated in organised, contracted market-place, say industry trackers.

Anjani Mandal, CEO and CoFounder, Fortigo Network Logistics told BusinessLine, that before the virulent wave of pandemic hit this year, truck rentals for medium and large size trucks under contract had soared year-on-year. This was because of a 30 per cent drop in supply of trucks in early 2021 as many of the small transporters could not survive the slowdown of 2019 and subsequent first wave of pandemic.

IFTRT has recorded a sequential drop in rentals in the open market since May.

IFTRT’s survey in May first week showed drivers were retreating to safety of their native places. They were unwilling to ply long distances as they were not sure of whether they would get cargo back from those locations. But this did not affect truck rentals in a large number of trunk routes as cargo availability had also dropped.

Bucking trend

There are exceptions given as the market is fragmented, largely unorganised, and consolidated data is not available. For instance, Spoton Logistics, a ₹850 crore company, did not see a drop in the number of trucks available for hire in the sectors that it operates in, and expects a 40 per cent growth in revenue next year based on higher volumes.

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