A Rs 2 per litre drop in diesel prices on August15-16 has led to a fall in truck rentals, according to the Indian Foundation of Transport Research and Training (IFTRT).
In an update, it said that the arrival of fruits and vegetables into vegetable wholesale markets were down by 25 per cent and there were lower cargo arrivals from factory gates leading to 3-4 days lag in getting return load on long distance routes, some of which were disrupted due to heavy rains in most parts of the country.
Truck rentals had dropped by 1.5-2 per cent during the first week of August 2016. Moreover, when truck markets opened after two days of holiday, truck rentals for medium and long haulage are being quoted further lower by two per cent in cities across important freight centres due oversupply of trucks, it added.
Truck sales may drop by at least 15-20 per cent for August. IFTRT is also apprehensive about truck sales as fleet owners expect an adverse impact of the implementation of goods and services tax regime on their fleet utilisation.
“As the crude oil price basket of PSU oil marketing companies (OMCs) has been around $ 43/bbl, the OMCs obliged with Rs. 2/ltr cut in diesel price with August 2016 right on the heels of Rs.2.01/ ltr diesel price cut on 1st August 2016. The stable rupee currency as dollar also helped to keep diesel price lower by Rs. 4.01 a litre (Rs. 2.01 + Rs 2/ltr) between 31 July/1st August mid-night to 16 August, 2016,’’ it added.
Monthly revenue of truckers in the last 12 weeks or so have taken a plunge. It has a direct bearing on heavy duty truck sales, which predominantly operate on medium and long haulage.
So far, the IFTRT’s interface with auto makers, dealers, truck financiers -- leading NBFCs and banks has only confirmed the fears that till mid August 2016, actual funding has been lower by 40-50 per cent and for the remaining part of current month the immediate convertible leads for truck financing are pretty low.
Truck sales generally for the past year and half till June 2016 have largely led initially by low base effect, huge discounts by dealers, lower fund cost and liberal loan facilities, subvention to financiers by dealers and later most importantly the pressure of various regulatory changes pushed up sales of M&HCV truck sales.
Now, truckers are waiting for higher consumer spending on the back of implementation of seventh Pay Commission, good post-monsoon harvest in in October, and the festival season.
This will boost the cargo availability and help truckers have better fleet utilisation over the subsequent few months. A recovery in truck rentals is necessary for increasing the truck sales, IFTRT said.