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Truck Rentals slide by 4-4.5 per cent on trunk routes; GST migration fear grips the trade leading to curtailment of inventories

With diesel price down by Rs.1.92/lit during May 2016, the truck rentals outpaced the drop by sliding to 4 - 4.5 per cent as summer agri crop tapering off and factory output taking a steep cut as wholesalers / traders curtail lifting of inventories due to GST migration fears. 

 This trend had caused sharp drop in cargo offerings for wholesale markets across the country. On the other hand heavy truck sales have been less than 50 per cent May 2017 in comparison to the same period last year. There has been resistance to high priced BS-IV vehicles, existing over supply of National Permit truck fleet and fear of unknown on the improved fleet utilisation post GST regime, which promises hassle free movement of goods across the country -

 While Rs.1.04/ltr diesel price hike effective from June first has so far not got reflected in truck rentals but otherwise truck rentals have slide by 4 to- 4.5 per cent on the back of Rs.1.92/ltr diesel price cut in May 2017 (Rs.1.52/ltr increase on 1.5.2017 and Rs.2.44/ltr cut on 15.5.2017) as summer agricultural crop tapering off and factory output taking a steep cut as wholesalers / traders curtail lifting of inventories due to GST migration fears.

 This trend has caused sharp drop in cargo offerings for wholesale markets across the country. The procurement of wheat, other cereals and lentils has tapered off in the second half of May.  Simultaneously, the GST migration, change in tax rate and confusion about tax impact on stock transfer has led to sharp drop in cargo offerings from factory gates by 10 to-15 per cent on the trunk routes leading to increased waiting time for return load to truckers.

 Only, the consumer spending coming from agriculture income in the current season in the rural economy has kept the business activity taking further slump, otherwise truck rentals would have dropped even beyond 4.5 per cent on most of the trunk routes. Most of the truck rental drop has taken place in last 10 days of the May 2017.

 Given, the advent of monsoon season from 2nd half of June 2017, the vegetable and fruit supplies shall witness a routine drop and the trade and commerce reeling under GST shift be more concerned about managing their inventories to avoid any major loss due to stock transfer impact on their businesses. Thus the factory output and cargo movement shall be checkered across the country and shall keep the truck rentals under stress.

 The following is the truck rental table for the period of 2nd May'17 to 1st June'17 period (i.e. May month 2017):

 

FULL TRUCK  LOAD (25.2 TON G.V.W.) rental (Rs per round trip)

  Trunk Route

Rental Movement

( per Round Trip)

(for 15 ton PAY LOAD)

 

Round Trip/ 

15 ton pay load

1

Rental as on          

2nd May'17

2

Rental as on          

1st June'17

3

 

Average Monthly truck rentals during Jan-December 2015 

5

Average Monthly truck rentals  during Jan-December 2016

6

 Delhi - Mumbai-Delhi

87100

83200(-4.5%)

 

76967

84921(+10%)

Delhi - Nagpur-Delhi

86400

82500(-4.5%)

 

76767

84563(+10%)

Delhi - Kolkata-Delhi

86800

82900(-4.5%)

 

78400

86275(+10%)

Delhi - Guwahati-Delhi

152700

146600(-4.0%)

 

131950

140763(+7%)

Delhi - Hyderabad-Delhi

119600

114200(-4.5%)

 

109317

119400(+9%)

Delhi - Chennai-Delhi

128600

122800(-4.5%)

 

122308

131925(+8%)

Delhi - Bangalore-Delhi

136300

130200(-4.5%)

 

121792

131708(+8%)

Delhi - Ranchi-Delhi

88700

85200(-4.0%)

 

79600

87350(+10%)

Delhi Raipur-Delhi

83400

79700(-4.5%)

 

76208

82763(+9%)

Delhi - Kandla-Delhi

88100

84200(-4.5%)

 

61358

72517(+19%)

Delhi - Bilaspur-Delhi

87000

83100(-4.5%)

 

75950

83467(+10%)

 

 

Emerging scenario:  In the present dim cargo offerings for full truck load (FTL) for various reasons as explained above, the Rs.1.04/ltr diesel price hike from the midnight of 31st May/1st June 2017 has no impact in lifting up truck rentals, as checked by Indian forum for transport research and Training  (IFTRT) today from various truck unions/truck brokers.

Therefore, IFTRT is of the opinion the truck rentals may further weaken and it will have direct impact on the truck fleet induction and replacement for Medium and Heavy Commercial Vehicles.  Thus it is not surprising that heavy truck sales have been less than half in May 2017 in comparison to the same period last year with resistance to high priced BS-IV vehicles, existing over supply of National Permit truck fleet and fear of unknown on the improved fleet utilisation post GST regime, which promises hassle free movement of goods across the country and fleet owners are extra-ordinarily cautious on BS-IV truck purchases.




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