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Truck rentals down by three to four per cent in December as cargo availability was low

Truck Rentals was down by 3 to 4 per cent on trunk routes during December 2017 despite peaking of diesel price to Rs.59.70/ltr (ex-Delhi) as cargo availability from agri products, SME units remain low durig entire month, 

 Revival in factory output from Cement and Steel and mining /infrastructure sector checked the free fall in truck rentals as there has been over supply of new truck fleet during third quarter of the Financial Year. This comes on the back of 60 to 80 per cent jump in truck sales of various categories during December'17 due to low base, deep discounts and low EMIs on purchase of new trucks, The demand has come from few pockets like e-commerce for 10 ton payload trucks, 27 ton payload multi-axle trucks for bulk cargo and 40 tonner multi-axle trailers for container movement on trunk routes according to the monthly report from the Delhi based Indian Foundation of Transport Research and Training.

 Truck rental Trend : Globally the international Brent crude price has peaked to 67 US Dollars per barrel last week and has made the diesel in the Indian market costlier by Rs.1 per liter in the last fortnight.

The truck rentals, however  instead of moving up with this cost push have dropped during December'17 by 3 to 4 per cent, thereby neutralized the rental increase of similar proportion witnessed last month.

This is due to the fact that excess truck fleet replacement is chasing lower cargo from various trade and manufacturing areas except some support coming from steel and cement to the trucking business. Otherwise, given the checkered transport freight market situation, the truck rentals could have fallen more than 3 to 4 per cent during December 2017.

 The IFTRT normally tracks 75 trunk routes and has come across that in the large majority of trunk routes, the full round trip period has gone up by 20 to 25 per cent as trucks have to wait for 2-4 days to capture return load on medium and long haul. Thus, the overall revenue on monthly basis for big commercial vehicles have dropped by 15 to 20 per cent along with fall in truck rentals. However, the deep discounts give by automobile manufacturers of around 12 to 15 per cent on purchase of new truck, lower EMIs and Nil margin money along with soft truck tyre prices due to discounts have been the saving grace for truckers to bear with increasing fuel cost and lower truck rentals.

         The following is the truck rental table for the period of 2nd Dec'17 to 1st Jan'18  (i.e. December 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 Nov'17

2

Rental as on          

2nd Dec'17

3

Rental as on          

1st Jan'18

4

Average Monthly truck rentals during Jan-Dec 2015 

5

Average Monthly truck rentals  during Jan-December 2016

6

  Delhi - Mumbai-Delhi

80200(-7.9%)

83400(+4%)

81000(-3%)

76967

84921(+10%)

Delhi - Nagpur-Delhi

77800(-8.0%)

80900(+4%)

78500(-3%)

76767

84563(+10%)

Delhi - Kolkata-Delhi

77000(-7.3%)

80100(+4%)

77000(-4%)

78400

86275(+10%)

Delhi - Guwahati-Delhi

135300(-7.0%)

139400(+3%)

134000(-4%)

131950

140763(+7%)

Delhi - Hyderabad-Delhi

109300(-8.0%)

113700(+4%)

109000(-4%)

109317

119400(+9%)

Delhi - Chennai-Delhi

115200(-8.0%)

119800(+4%)

115000(-4%)

122308

131925(+8%)

Delhi - Bangalore-Delhi

122000(-8.0%)

126900(+4%)

122000(-4%)

121792

131708(+8%)

Delhi - Ranchi-Delhi

79900(-8.0%)

107900(+3.5%)

103600(-4%)

79600

87350(+10%)

Delhi Raipur-Delhi

74300(-8.0%)

77300(+4%)

742000(-4%)

76208

82763(+9%)

Delhi - Kandla-Delhi

78800(-8.0%)

82000(+4%)

79500(-3%)

61358

72517(+19%)

Delhi - Bilaspur-Delhi

78000(-7.8%)

81100(+4%)

77900(-4%)

75950

83467(+10%)

: 2:

 

 

Truck Sales: Contrary to the much publicized steep jump in speed of truck transport post GST roll out, the truck sales last two quarters has gone up double digit touching the peak sales of 60 to 80 per cent during December 2017 for different variants of intermediate commercial vehicles (ICVs) having 15 ton-16 ton GVW, 37.2 ton multi-axle trucks and 40 tonner tractor trailers.

The market is perplexed that despite low cargo availability and claim of increase in fleet utilization due to tax reform and removal of border check posts across the country, the existing truck fleet was enough to take care of cargo volumes in the freight market. But, the much hyped hefty price increase due to mandatory fitment of ventilator in truck cabins, preponed the truck buying duly supported by deep discounts and low EMIs.

 E-Waybill System: The coming January month shall witness steep increase in cargo movement as e-way bill on inter-state shall be becoming mandatory from February 1.and shall most possibly make movement of mass GST evasion highly difficult. Therefore businesses and transporters would like to pile up inventories escaping the high 18 to 28 per cent GST on various items.

 In absence of e-way bill post roll out of GST, the revenue leakage has been very rampant particularly from SMEs, wholesalers and distributors with the help of goods transport agents (GTAs).

 The e-way Bill compliance on inter-state transaction above Rs.50,000/- consignment, if introduced also for intra-state goods movement simultaneously as States are fully equipped digitally the goods transport business may go in for toss as it may threaten the very existence of illegal Goods Transport Agents. This may force shake out or consolidation in the goods transport business, which largely has been thriving on huge mix of ferrying tax evading cargo at premium freight charges for retail parcel consignments although the truck rentals have been soft for last six months except festival month October 2017.

 IFTRT Skeptical: However, various trade, industry and transport logistic bodies are working overtime to ensure deferment of e-waybill on inter-state transaction to April 2018 They hope that Government will be later compelled to defer e-waybill on inter-State and intra-State to next year as ruling party shall be preoccupied with elections in 8 States during 2018. During this period the government will not be in a position to displease the powerful lobbies of trade, industry, commerce and transport as it happened during the Gujarat State elections last month.

 Hence, the IFTRT strongly favors enforcement of e-waybill system to check mass tax evasion. It also seeks enforcement of anti profiteering clause under GST with suo-moto powers to catch hold of businesses not passing the input tax credits (ITC) on goods and services.

It is however skeptical about the intent and capability of government not to kneel before the might of big businesses while implementing reforms in the truck transport industry. The body would like to proved wrong on the issue of implementation of e-waybill and anti-profiteering clause under GST reform program, which otherwise has been limping for last six months.

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