Logistics

Truckers bodies seek to penalise those not raising freight rates

Mamuni Das New Delhi | Updated on March 08, 2021

Any bid to fix freight collectively is against free play of market forces, say observers

As fuel costs soar, more and more truckers bodies across States are not only asking their members to start charging higher rates, but are also seeking to impose penalty on those who are not increasing the freight rates and asking other members to not cooperate with them.

The Youth Federation of Raipur, Chhattisgarh, whose members are also part of larger truck unions, is the latest to come out with such a directive.

In a note seen by BusinessLine, the federation has said that those transporters and truck-owners who load their vehicles for lower than the specified rates will have to pay ₹10,000 each. India’s truck market is highly fragmented and comprise a large number of small truck owners, who have less than five trucks.

SP Singh, Senior Fellow, Indian Foundation of Transport Research and Training (IFTRT), a transport research body, said that such “collective freight fixation” by transport unions/associations (citing diesel price hike) has spread across the country.

‘A symbolic gesture’

Free and fair play of market forces has virtually taken a backseat, said the IFTRT, adding that transport unions/ associations from Jammu to Chennai were resorting to such action (of fixing higher freight rates).

Explaining the rationale behind the move, Sukhwinder Singh, Member, Youth Federation of Raipur, told BusinessLine: “We represent the small truck-owners (those owning up to five trucks). Small truck-owners are reeling under high costs, but do not get higher rates that end-customers pay to the larger transporters (who in turn hire trucks from small truck owners). So, we have sought an increase in rates to that extent (about ₹100-200 per tonne).”

When asked about the so-called penalty on those truckers who do not increase rates, Singh said that implementing this is tough. “The penalty is more of a gesture (just like traffic penalties). We don’t demand or accept penalties. But we do tell others in the fraternity about those truckers who are carrying loads at lower rates and break our unity in the process. Some of those truckers who are plying at lower rates plead that they are continuing to operate at lower rates to keep afloat as they have to pay EMIs (failure to do so will result in their vehicles getting repossessed),” Sukhwinder Singh explained.

Earlier, the Kandla Mundra Container Transport Welfare Association (KMCTWA) had asked its members to increase the freight rates and said that those who do not cooperate will be boycotted.

“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 said in the letter.

Published on March 08, 2021

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