Freight rates, truck sales dip on muted industrial activity

Truckers were unable to raise freight rates in tandem with the increase in the price of diesel in the year as industrial activity remained muted, explained Shreenivas of India Ratings. The price of diesel in Mumbai rose 16% between June and December while in Delhi, it was up 13.7% since August.

However, the partial deregulation of diesel prices by the government on Thursday is expected to lead to a moderate upward movement in freight rates in the short term, say consultants. A likely revival in sectors like cement, steel and agricultural products is also expected to come as a breather for truckers.

The Indian Road Freight Index, collated by Transport Corporation of India, forecasts January 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.

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