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Weak demand from industry not demonetisation cause for slump in truck rentals: an analysis by Transport research body

The Hindu Business Line January 11 news item- Slump in business and not cash crunch hits Namakal truckers hard- only vindicates the Indian Foundation of Transport Research and Training's assertion that a influential section of transporters are now using the dislocation in supply chain post demonetisation, to extract unfair concessions from the government. The truckers even the smaller ones have shifted to digital mode.

One of the key demands of Common Carriers led by their Delhi based premier Associations has been to get cash withdrawal limit hiked substantially even to the limit of Rs.15,000/- per day.  The bigger lobby of transporters/ common carriershave pressed for cash withdrawal limit to be raised higher post demonetisation to Rs.5,000/- a day ie monthly Rs.1.5 lac for enroute expenses.

The truckers as stated in Business Line story are shifting to digital mode to counter cash need of drivers for various daily expenses for their fleet. The S.P.Mohan , quoted as truck operator in the news story in Namakal( Tamil Nadu) of having shifted to digital mode is a key office bearer of the Fleet Owners Union and   affiliated to All India Motor Transport Congress( AIMTC). Late Mr. Sengoden from Namakal Truckers Union was President of AIMTC.

The crux of matter is that demonetisation has huge adverse impact on supply chain and cargo virtually drying out with direct impact on fleet utilisation in November 2016 by drop of 40 to 50 per cent for the past four weeks.

The government, by exempting the truckers from toll payment on 391 toll booths on the National Highways provided succour to them from initial cash crunch by reducing the variable operating cost of a truck by 15- 20  per cent.

Though the truck hiring common carriers/ Transport Agents having annual contracts with Corporate Consignors had the bonanza since their contractual agreement did not have clause to slash freight charges because of the governmental decision to suspend toll collection for nearly a month. The transport contracts have only one escalation/ de- escalation clause due to revision in diesel price .That too has gone up by over Rs.4/ltr. No other issue is factored into their contracts.

The transporters have charged consignors as per their contracts but truck rentals in November and December, 2016 have been very weak and low despite cost escalation due to resumption in Toll during December and two hikes in diesel price.

The reason is that since every diesel price hike does not result in pro rata increase in truck rentals. IFTRT has witnessed that in the past two decades that despite diesel price increase truck rentals dropped due weak business sentiments,

Today the key issue for truckers and government is not cash crunch post demonetisation, in transport business, but how to come out of the machinations of powerful lobby of common carriers/ agents/ intermediaries, who are using truckers as foot soldiers. The slump in business is hitting the truckers hard not only in Namakal but in the entire country.

Te claim of Namakkal Truck Union that forty per cent of the fleet is under utilised in January however is a over-statement as things are moving gradually towards normalcy. The truck rentals are recovering from the low of November and December2016. Namakkal situated in Western Tamil Nadu is one of the leaders in the country for truck business

What ultimately shapes up the truck business in the fourth quarter of current fiscal ( ie January- March 2017) is being keenly observed by IFTRT in a routine manner. The forthcoming Union Budget, pre- buying of BS- III truck to beat BS- IV emission from 1.4.2017 and delayed introduction of GST hold key to market sentiments and shape of things to come. Let's keep our fingers crossed rather than harping on misplaced fears of common carriers/ transport intermediaries who claim to control 85 per cent of goods.

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