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Truck rentals down by seven to eight per cent in October according to a transport research body

 October (month) 2017: Truck Rentals were down by 7 to 8 per cent on trunk routes as there has been a steep drop in arrival of fruits and vegetables into Agricultural Price Marketing Committees by 20 to 25 per cent. Arrival of goods tapered off after the peak festival season in the second half of the October month and subsequent fall in consumer spending. However retail parcel freight charges remained steady. Avoiding cargo on intra-State and inter-State trade routes remained 'unhindered' in absence of national E-waybill system and slack enforcement by tax agencies, while truck sales grew marginally despite heavy discounts on purchase and low EMIs to fleet owners ACCORDING TO MONTHLY REPORT FROM INDIAN FOUNDATION OF TRANSPORT RESEARCH AND TRAINING

 Truck rental trend : The truck rentals during October month tumbled in the second half of current month by 7 to 8 per cent as festival season spending virtually dried out. There has been a 20 to 25 per cent fall in arrival of vegetables and fruits into Agricultural Price Marketing Committees across the country leading to lower full truck load (FTL) volumes on most of the trunk routes.

 As against  the single largest monthly 11 to 12 per cent truck rental jump during September, for the first time in almost last 60 months as there was massive 50 per cent rise in cargo dispatches on trunk routes to beat the deadline on e-waybill transit pass system which was to have been introduced from October One.

 The Businesses were piling up large inventories by avoiding 18 to 28 per cent GST on different products to meet the peak festival season demand. Hence retail parcel freight charges were prevailing at premium rates with unscrupulous traders trying to make hay when the sun was shining.

 The diesel price cut due to reduction in excise duty Rs.2/ltr by the central government and in addition to this cut in sales tax on diesel ranging Rs.2 - Rs.2.90/ltr by mostly BJP ruled States like Gujarat, Maharashtra, Madhya Pradesh and Himachal Pradesh too put stress on the truck rentals. But with the international Brent crude oil price touching 60.9 US dollars per barrel and winter demand of diesel in US and Europe likely to touch its peak and OPEC countries firm on continuing to cut the crude oil production to improve their realizations, it would be certainly very tough going for government and Oil Marketing Companies to keep diesel price under leash in the domestic market.  India's dependence on total crude oil imports in more than 80 per cent of its regular consumption The circular from the Inddian foundation of Transport Research and development.said

 2. The following is the truck rental table for the period of 2nd Sept'17 to 1st Oct'17  and further to 1st Nov'17 period (i.e. September and October months 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 Sep'17

2

Rental as on          

1st Oct'17

3

Rental as on          

1st Nov'17

4

Average Monthly truck rentals during Jan-Dec 2015 

5

Average Monthly truck rentals  during Jan-December 2016

6

 Delhi - Mumbai-Delhi

77800

87100(+12%)

80200(-7.9%)

76967

84921(+10%)

Delhi - Nagpur-Delhi

75400

84500(+12%)

77800(-8.0%)

76767

84563(+10%)

Delhi - Kolkata-Delhi

75400

84500(+12%)

77000(-7.3%)

78400

86275(+10%)

Delhi - Guwahati-Delhi

133400

145500(+11%)

135300(-7.0%)

131950

140763(+7%)

Delhi - Hyderabad-Delhi

106100

118800(+12%)

109300(-8.0%)

109317

119400(+9%)

Delhi - Chennai-Delhi

111800

125200(+12%)

115200(-8.0%)

122308

131925(+8%)

Delhi - Bangalore-Delhi

118500

132700(+12%)

122000(-8.0%)

121792

131708(+8%)

Delhi - Ranchi-Delhi

77500

86800(+12%)

79900(-8.0%)

79600

87350(+10%)

Delhi Raipur-Delhi

72100

80800(+12%)

74300(-8.0%)

76208

82763(+9%)

Delhi - Kandla-Delhi

76500

85700(+12%)

78800(-8.0%)

61358

72517(+19%)

Delhi - Bilaspur-Delhi

75600

84700(+12%)

78000(-7.8%)

75950

83467(+10%)

3. Retail Parcel Booking Movement : With common national e-waybill system remaining a non starter, despite commitment of GST Council to initiate the same from October 2017, it has given open ended freedom to unscrupulous traders and their ilk among goods transport agents (GTAs) to run amuck. They avoid cargo on intra-State and inter-State routes with impunity as the States and Centre in their exuberance on GST have abolished commercial tax check posts on highways. The State enforcement agencies too have slackened their vigil post GST scenario, particularly during last 3 months.

 There was peak festival season and high consumer spending till mid October 2017. The following is the retail parcel freight charges movement in different cities:


S.N

Destination/Routes

Retail Parcel Booking Consignment Freight Charges by GTAs in 2017

 

 

15th July  (Rs.)

15 Aug (Rs.)

15 Sep  (Rs.)

15 Oct (Rs.)

1.

Delhi-Udaipur

300/-

550/-

700/-

700/-

2.

Delhi-Ludhiana

235/-

325/-

450/-

450/-

3.

Delhi-Mumbai

550/-

800/-

900/-

900/-

4.

Delhi-Ranchi

450/-

650/-

750/-

750/-

5.

Delhi-Hyderabad

600/-

850/-

950/-

950/-

6.

Delhi-Chennai

875/-

1350/-

1500/-

1500/-

7.

Delhi-Kanpur

300/-

400/-

525/-

525/-

8.

Delhi-Indore

350/-

550/-

650/-

650/-

9.

Delhi-Jammu

550/-

700/-

750/-

750/-

10.

Delhi-Dehradun

450/-

600/-

700/-

700/-

 4. Scenario : There has been a erratic implementation and enforcement of GST reform and the same is likely to continue for another two more months till the elections to Gujarat assembly is completed. The introduction of common e-waybill system remains a non starter. The advantage will go to tax evading mass of unscrupulous businesses and their ilk among Goods Transport Agents. The retail parcel freight rates across the country shall remain on the high side, while truck rental movement will largely depend on freight demand from agri-produce and factory output. The employment of truck fleet in the infrastructure sector and mining is however showing an upswing.

 5. Truck Sales: On the other hand, the truck sales has been largely coming from replacement demand for BS-IV heavy trucks and transporters migrating to high tonnage vehicles as well as the transport contractual business. The corporate consignors and PSUs are demanding younger age fleet in the new contracts, particularly from petroleum products transportation and upgradation to higher tonnage in Tipper trucks/cement mixtures demand in mining and infrastructure projects.

 Nevertheless, the October month has witnessed a very timid upswing in the medium and heavy truck sales ranging 3 to-4 per cent only for leading truck maker. The demand for new vehicles in the open market is rather negative because trucks / trailers getting laid off from contractual business are flooding the open market load space.

 It is somewhat surprising that despite roll out of GST from 1st July 2017, the claim by the government on decrease in travel time for trucks by 15 to 30 per cent on various trunk routes with abolition of commercial tax at border check posts s and removal of RTO check posts by several States has not been fulfilled in August - October 2017 period. This has been the reason why the truck sales grew by double digit during August and September in the current fiscal and now the demand is less due to short supply of cargo from agri produce and lower demand of trucks from various trucking centres.

 6. Hence, the second half of the current fiscal and particularly third quarter could be very tricky from the point of view of truck rental movement and demand for new BS-IV medium and heavy trucks.

 Now it is to be seen how the various stimulus measures expected from central government to increase government spending may result in perking up truck transport on a sustainable basis with increased efficiency in last quarter of current fiscal.

 The absence of any sign of private investment picking up may keep economy under suspense about double digit growth in manufacturing and infrastructure sector. While, quantum jump in World Bank's Ease of doing business index from 130 to 100 no. might have flared up stock markets in India, but how far various internal factors criss-crossing each other negating the benefits of demonetization and GST Reform will be seen at the ground level as real game changers for general economy.

 In case of GST, the Anti-Profiteering Clause has not yielded any mentionable benefit of passing on Input Tax Credit (ITC) by most of the manufacturing businesses and service providers. Consequently the prices of end products have remained unchanged in the post GST scenario or in large number of cases gone up resulting in trust deficit about the real success of the historical GST tax reform. 



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