Freight rates, truck sales dip on muted industrial activity

Jan 21 2013, 01:17 IST
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SummaryThe three major road corridors in the country witnessed a 3% average fall in freight rates in calendar year 2012, pointing to sluggish demand in goods transport that led to an over 20% dip in truck sales for the period.

freight rates to remain firm because of the improved industrial output and the approaching financial year end of many companies.

"There is not much of idling of truck operators as we are seeing the demand picking up in the market from December," said Umesh Govind Revankar, managing director, Shriram Commercial Vehicle Finance. "We expect the freight rates to remain steady for the remaining three months (January-March) of this financial year."

Karl Slym, managing director, India operations, Tata Motors, recently told brokerages that the company expects M&HCV to see a 10-15% compound annual growth rate in tonnage growth over the next 5-10 years.

It is noteworthy that in 2011 there was bulk re-buying by truck operators due to the new emission norms that kicked in in the latter half of the year. This is also seen as another reason why demand for new trucks was impacted in 2012.

"We expect the demand for commercial vehicles, especially medium and heavy trucks, to go up by end of 2014, wherein government takes steps to boost the power, infrastructure and engineering sectors. Moreover, the coal and mining sector is integral to the demand for heavy trucks," said Revankar of Shriram Commercial Vehicle Finance.

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