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Trunk rentals remain remained range bound and firm due to festival season and Kharif harvest

As international Brent crude slumped by almost 13 US Dollars per barrel during October with RS US Dollar exchange rates  having softened in favor of India by about Rs.2 /-, These favorable developments in the international market have helped the Oil Marketing Companies to reduce the diesel price in second half of October 2018 by around Rs.2/lit across the country. 

Due to reduction in excise duty announced by the government there was as the earlier another price cut of Rs.2.50/lit (Rs.1.50 a lit reduction in excise duty and Rs.1/- a lit cut by OMCs). The reduction was neutralized by Rs.2.90/lit increase in diesel price during first fortnight of October. 

However, the State-VAT reduction announced by several States ranging Rs.1/lit - Rs.2.50/lit  helped the contractual road transport business to cut the truck freight by transport contractors, but  the total diesel price cut by Oil Marketing Companies and VAT reduction by several state governments displayed very limited reduction in truck rentals on few trunk routes. 

The trunk rentals had remained range bound and firm post 15 Oct according to a study conducted by the New Delhi based Indian Foundation for Transport Research and Training, 

In seventy key trunk routes across the country, the trend was witnessed due to very heavy demand of goods carriages due to peak festival season, huge consumer spending and extra engagement of trucks & trailers in infrastructure projects and demand from Kharif agricultural  harvesting season during October. 

While, heavy truck sales have substantially moderated by 15 per cent increase  as against 25 to-30 per cent for past 12 months and this drop happened despite low base for the same month last year. 

Though, the first week of November has seen 15 to 20 per cent drop in truck fleet demand as festival related dispatches have come down by over 25 per cent and Kharif harvesting too has tapered off between November 1  to November 6 instant. 

As 30 to 35 per cent of the truck drivers workforce have gone on leave for 'Diwali' Festival and 'Chhat Puja'   to their native places, the drop in cargo offerings and cut in diesel price have not reduced the truck rentals for the full truck load in the open freight load market. The truck supply too has come down due to absence of truck crew with the fleet owners- IFTRT monthly REPORT. 

Truck rental trend : Led by various factors, the truck rentals full truck load market has remained quiet volatile and contrarian to the normal expectation of open freight market despite fall in international crude price leading to partial cut in diesel price. The peak festival demand, kharif food item procurement, arrival of fresh fruits and vegetables due to ushering in of winter season and demand for truck fleet from rural economy and extra deployment of construction equipment / tippers / trailers / cement mixtures on the infrastructure projects have ensured the truck rentals remaining firm and range bound.  It  sustained a 5 to  - 6 per cent hike in truck rentals during September 2018 and October 2018 month.

Out of 75 trunk routes, 70 . trunk routes witnessed a mild 1 per cent increase in truck rentals without bothering for daily cut in diesel price for the full truck load in the open market. 

The truck freight charges by the annual contract based transport businesses have come down in tune with softening of diesel price. The contractual business backed by strong support from e-commerce has reached almost 30 per cent of the total pie as against remaining 70 per cent in the open market full truck load. The benefit of fall in diesel price has hardly impacted drop in truck rentals during October. 

Interestingly, the truck rentals are most firm and rather buoyant  in election bound States because of huge escalation in spending by political parties leading to extra supply of money and consumer spending in these States. 

However, it is intriguing that how the current and next quarter pan out in terms of truck sales and given the market scenario and over supply of heavy truck fleet for past year and half, the economic scenario needs to have 7 to 8 per cent growth in manufacturing sector and higher growth in export trade and, 3 to 4 per cent extra improvement in food and agri products to maintain double digit HCV sales.                                                                                                                                              The following is the truck rental table for the period of 2nd Oct'18 to 1st Nov'18 and rentals outpace diesel hike during last nine months (1st Jan 2018 to 31st Sept 2018) for full truck load per round trip:

 

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) (Rs.)

 

Round Trip/ 

15 ton pay load

1

Rental as on           2ndOct'18

2

Rental as on          

1st Nov'18

3

 

Rental as on          

2nd Jan'18

4

INCREASE in Rentals from 2nd Jan'18 to 1st Sept'18 (9 month period)

5

Diesel price hike impact during 1Jan to 30Sept 2018*

6

Rentals outpace diesel hike during last 9 months

 7

  Delhi - Mumbai-Delhi

96350(+6%)

97500(+1.1%)

 

81000

15350

9700

+5650

Delhi - Nagpur-Delhi

91800(+6%)

93000 (+1.1%)

 

78500

13300

9700

+3600

Delhi - Kolkata-Delhi

91200(+6%)

    91200 (NC)

 

77000

14200

10200

+4000

Delhi - Guwahati-Delhi

156900(+6%)

155500 (-1%)

 

134000

22900

15100

+7800

Delhi - Hyderabad-Delhi

128300(+6%)

129500 (+1%)

 

109000

19300

10700

+8600

Delhi - Chennai-Delhi

134100(+6%)

135500(+1%)

 

115000

19100

14900

+4200

Delhi - Bangalore-Delhi

144200(+6%)

145500 (+1%)

 

122000

22200

15300

+6900

Delhi - Ranchi-Delhi

118600(+5%)

117000(-1.2%)

 

103600

15100

9500

+5600

Delhi Raipur-Delhi

88000(+6%)

89600(+2%)

 

742000

13800

9500

+4300

Delhi - Kandla-Delhi

92800(+6%)

94700(+2%)

 

79500

13300

8500

+4800

Delhi - Bilaspur-Delhi

92200(+6%)

94000(+2%)

 

77900

14300

9600

+4700

*Diesel price (ex-Delhi) Rs.59.70/ltr as on 1st Jan'18 and Rs.74.20/ltr as on 30 Sept'18 and Taking average diesel consumption of  4 km/ltr on the full round trip X Rs. 14.50 (diesel price hike during nine months period). 

Transporters and GST evasion as bonanza : GST struggling for last 16 months from roll out and after  30 GST Council Meetings as rampaging " Fake firm generates E-way bill worth Rs 6 Cr ,Owner disappears ." ( The Tribune , 30/9/2018 ) as probe on another similar case Rs 5 to 6 Cr is already on in the State with just 47,000 firms registered under the GST

Delhi- NCR historically continues to be cess-pool of tax evasion and unholy nexus of unscrupulous Businesses, Transporters and enforcement Agencies to make E-waybill digital transit pass system on intra-state and inter-state trade routes virtually ineffective by mass under- reporting and mis- reporting in business hubs in Delhi- NCR.  This region is hub role model for rest of the country in terms of trade practices.  

The GST rules and Carriage by Road Rules are complementary to each other to reign in unscrupulous Businesses and their ilk among TRANSPORTERS/ Common carriers. It high time to act fast to save GST to Reform trade, commerce and transportation in the country to make India a true manufacturing & trading hub and convert India into a single Common Market in its effective letter and spirit. The Government's lackadaisical approach and over confidence in working and enforcement of GST rules and media in big metros weary of highlighting short comings in GST collection and analysis is only retarding the GST REFORMs. Tje GST Council Meetings have their own priorities to glorify the Centre Government.  

The recent GST collection data of September having crossed Rs.1 trillion as announced in October and similar increase during March 2018 may be a face saver All business establishments and manufacturing verticals should display growth and improve compliance level . The real test of GST success could be measured if GST monthly collection goes up to Rs. 1.25 trillion. 


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