A decline in diesel prices and lack of cargo from the manufacturing sector led to truck rentals falling by as much as 6% in August.
A price cut of R3.60 a litre on August 1 followed by R1.17 a litre on August 15 have led to this fall, according to data available with the Indian Foundation for Transport Research Foundation (IFTRT).
The other reason has been flat cargo offerings from fruits & vegetables as well as sudden jump in new purchase of M&HCV trucks due to impending 5% price increase expected from October 1 due to mandatory fitment of ABS (anti-lock braking system) and speed control devises, said IFTRT.
The significant diesel price cut due to steep fall in international crude price led to 6% fall in truck rentals on trunk routes. This was further impacted by flatness in cargo offerings from agri-sector and manufacturing sector, while export trade remain timid despite incentive of weak rupee currency.
The R0.50 a litre cut in diesel price on August 31/September 1 shall have further pressure on truck rentals in coming days. The 20% shortfall in monsoon rains in 8 states is going to have major adverse impact on food and cash crops and as a consequence will lead to uncertainty in the economy and freight market in next 4-5 months.
The freight fixation formula implemented w.e.f. August 7 by Odisha government for movement of mines including coal has now set the benchmark for other mines and coal producing states. The opening up of coal blocks had given a strong signal that there may be extra requirement of multi-axle trucks and trailers in Chhattisgarh, Jharkhand, Odisha, West Bengal, some parts of MP, Karnataka and Goa.