After the June 4 increase in fuel prices, road transporters had hiked the truck rentals and cargo freight by 10-15%. This, however, is far more than the weighted impact of Rs 3 per litre hike in diesel prices, says a status report by the Indian Foundation of Transport Research and Training (IFTRT).
IFTRT says in the first week of June itself, the truck rentals had gone up by 8-10% in different parts of the country and consequently even the truck-hiring firms, like goods booking agents, raised the retail parcel and general cargo freight by 10-15%.
Since most state governments had reduced the local sales tax on diesel to moderate the fuel price hike impact, the actual increase, on an average, for inter-state truckers worked out to be Rs 2 per litre, a rupee less than the actual hike. In tune with that, the truck rentals should have gone up by 3-3.5% on inter-state trunk routes instead of 8-10%. This led to an unjustified increase of Rs 1,700 to Rs 4,500 on different truck routes by the truckers, the report said.
Similarly, since the entire truck rental is part of the transportation cost, which is an input for gross freight charges, ideally the weighted impact of increased truck rentals should have varied between 1% and 2%. However, since the truck rentals have gone up by 8-10%, the impact could be 1.75% to 2.75%.
Unfortunately, the recent price revision effected by transport intermediaries is almost five times the actual increase in truck rentals, says the report.
The hardest hit from the freight hike could be small and medium scale manufacturers, as they account for 70-75% of cargo.
It is estimated that while FMCG, hosiery items, stationery items, cereals and fruit & vegetables will have to bear the extra transport cost burden of a minimum of 4%, manufacturers and dealers of white goods, two-wheelers and four-wheelers may end up incorporating 4-5% more.