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Freight rates drop by 1.5 to 2 per cent in November as cargo offerings continue to remain poor

The truck rentals had bottomed out and remained benign during November with a marginal drop in freight rates by 1.5 to 2 per cent even as the trucking business remained at its most fragile moment due to poor cargo offering. The saving grace was stable fuel prices throughout the month with diesel prices hovering around Rs 65.80 per liter (ex Delhi) 

Truck operators very cautious in fleet replacement 

The fleet utilization remained at historic low of 30 to 35 per cent for Medium and Heavy Commercial Vehicles on trunk routes.The only consolation was truck operators have been very cautious in fleet replacement. 

They ignored the much expected pre-buying of BS-IV trucks in order to beat  15 to 20 per cent hike in price of  goods carriers due to introduction of BS-VI vehicles  with effect from April first next year. 

Therefore, truck sales during November 2019 were on the down side by 40 to 45 per cent for various variants as truck makers have curtailed the production and have been observing shut downs in the factories to save cost. 

Mandatory introduction of FASTags has not taken off 

On the other hand the move of mandatory introduction of FASTags has not taken off due to various issues still to be sorted out by NHAI to make free flow of traffic through TOLL Plazas on National Highways. In all likelihood FASTag seems to take roots from January 2020 which should help the truckers to save travel time by 15 to  -20 per cent on trunk routes according to monthly report of the New Delhi based Indian foundation of Transport Research and Training. 

Truck rental trend :  The diesel prices in the retail market is expected to go up by the end of December as the prices of international brent crude has hardened  during the last 10 days and prevailed at 64 US Dollars per barrel. The value of the Indian rupee against the US Dollar has also weakend to rs 71.75. 

On the other hand, the diesel price has been hovering around Rs.65.80/ltr (ex-Delhi) throughout November due to continuous slump in industrial and core sector activities and adverse procurement of fruit / vegetables and food items by 10 to 15 per cent. The trend remained like that except for vegetables like onions and potatoes where the supply has been down by 30 to 40 per cent. 

The truck rentals continued their slide on quarter to quarter basis and November 2019 witnessed 1.5 to 2.0 per cent drop in truck rentals on leading 75 trunk routes which are tracked by Indian Foundation  of Transport Research and Training through its 52 resource persons monitoring across the country.

However, the transporters / common carriers / goods transport agents despite handling lower volumes, have been thriving on transportation of consignments which are bypassing the GST rules and short changing the State exchequer. They continue to charge high freight rates from unscrupulous consignors /businesses and able to outsource trucks at phenomenally low rentals due to over-supply of trucks on key trade and transport centers.

This dichotomy is prevailing when GDP growth has touched 4.5 per cent, a six year low and core sector is in negative territory by -5.8 per cent in last quarter being worst in last 13-14 years. Given the present gloom period, the recovery in economy may take much longer time then being expected by Government of India.. Most of the financial and economic measures announced by NDA-2 Government appear to be lack conviction. The cut in corporate tax have only benefitted the India Inc. and their performance on the bourses.

The following is the table representing the truck rentals during 2nd Nov 2019 to 1st Dec 2019 on trunk routes during Nov. 2019 month and annual average truck rentals :

 

FULL TRUCK  LOAD (28.2 TON G.V.W.) rental (Rs per round trip)

  Trunk Route

Rental Movement

( per Round Trip)

(for 18 ton PAY LOAD) (Rs.)

 

Round Trip/ 

18 ton pay load

1

Rental as on           2nd Nov'19

 

2

Rental as on          

1st Dec'19

 

3

Nov'18-July'19

9 Months Period     (% drop)

4

Average truck rentals April'17 to March'18

5

Average truck rentals April'18 to March'19

 

6

Difference in Av truck rentals FY'19-FY'18

 

7

  Delhi - Mumbai-Delhi

88200

86500(-2.0%)

97500-84700 (-13.1)

83000

90900

7900(+9.5%)

Delhi - Nagpur-Delhi

86200

85000(-1.5%)

93000-82100 (-12.0)

80700

86700

6000(+7.4%)

Delhi - Kolkata-Delhi

84500

83200(-1.5%)

91200-80400 (-11.8)

80400

85500

5100(+6.3%)

Delhi - Guwahati-Delhi

135000

133000(-1.5%)

155500-129000 (-17.0)

140600

150400

9800(+6.9%)

Delhi - Hyderabad-Delhi

115800

113500(-2.0%)

129500-111200 (-14.1)

113000

121000

8000(+7.0%)

Delhi - Chennai-Delhi

119500

117000(-2.0%)

135500-115000(-15.1)

119200

126000

6800(+5.7%)

Delhi - Bangalore-Delhi

130000

127500(-2.0%)

145500-124000 (-14.8)

126800

135000

8200(+6.4%)

Delhi - Ranchi-Delhi

98700

96700(-2.0%)

117000-96200 (-17.8)

93400

109800

7600(+8.4%)

Delhi – Raipur-Delhi

82400

81200(-1.5%)

89600-78500 (-12.4)

77200

83300

6100(+7.9%)

Delhi - Kandla-Delhi

86200

85000(-1.5%)

94700-82000(-13.4)

82200

88300

6100(+7.4%)

Delhi - Bilaspur-Delhi

86000

84300(-2.0%)

94000-82000 (-12.8)

81000

87400

6400(+7.9%)

 

Road Transport Reforms : While, Trade, Commerce and Industry yet to recover post demonetization shocks and the GST w.e.f.1.07.2017 has yet to make any remarkable impact on the trading practices of plugging revenue leakages by unscrupulous businesses and their ilk among transporters / common carriers / Goods Transport Agents. 

The seamless movement of cargo across the country is still a distant dream because the various road transport related major reform like mandatory head count of transport intermediaries / common carriers, who control 80 per cent of the goods moved by road, under carriage by road act/rules, motor vehicles (amendment), 2019 have not taken off. 

The mandatory introduction of FASTag is still on the slow lane as its deadline of 1st December 2019 has been deferred by a fortnight and may be further stretched to 1st January 2020, as series of glitches at TOLL Plazas are yet to be sorted out to bring new FASTag system for free flow of traffic through digital means at par with international standards. 

Truck sales, BS-VI take off, mandatory vehicle scrapage: The monthly fleet utilization in last year and half has plummeted by 30 to 35 per cent for a truck running on trunk routes. This is borne out of economic slump, bordering on recession in some of the industries. Consequently the monthly revenue of trucks in last two quarters in particular has plummeted by a cut of 35 to 40 per cent. Trucks on trunk routes suffer from reduced round trips with 4-7 days waiting period for return cargo on most of routes.

 The truck sales naturally have dropped by 40 to 45 per cent and very high excitement displayed during the beginning of 2019 of pre-buying of BS-IV trucks in order to beat introduction of high cost BS-VI trucks has not fructified. These trucks have complicated electronic systems and fear of manufacturers outlets not going to be fully equipped with post sales services has not in any way generated the pre-buying of low priced and highly discounted BS-IV trucks despite being supported by low EMIs. 

Truck makers are hinging their hopes on the mandatory vehicle scrap policy 

Now, truck makers are hinging their hopes on the mandatory vehicle scrap policy yet to be approved by Union Cabinet. The Indian Foundation of Transport Research and Training has been consistent that there are other tools to curb vehicular air pollution by digitizing annual vehicle inspection and maintenance regime and upgrading the computerized PUC checkup system. 

The scrap policy is not fair for a developing economy like India on the single plank of vehicular air pollution in the 35 to 40 cities in the country.

 

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