Trucking has the advantage of last mile service

Updated: Nov 18 2005, 05:30am hrs
Over the last few years, the trucking sector has grown by leaps and bounds and has become a Rs 45,000-crore industry. This growth is a result of interplay of a number of factors such as the robust state of the Indian economy, boom in the retail sector, growth in the infrastructure sector and boom in the Indian aviation industry, etc. This is despite various deterrents in terms of the incessant fuel price hike, rise in input costs, etc.

One of the most significant developments in the Indian industry that has affected the trucking sector has been the fuel price hike over the last few months. This has increased the transportation costs considerably. As a result, some trucking companies have already commissioned an increase in freight rates.

However, in a larger perspective, fuel price hike affects both surface road and rail transport in India. In the case of railways, most freight trains on various routes are still hauled by diesel-powered locomotives and hence, increase in fuel price has impacted it.

Thus, both road and rail transport are affected by the fuel price hike unless it is artificially absorbed by the company without passing it on to the end-consumer. Cost absorption can also happen if it is off-season (monsoons) and the demand is sluggish.

Trucking is a more favoured mode of cargo movement over railways as it has the advantage of its last mile service. Trucking service scores over the railways as it offers both pick-up and delivery at the customers premises.

In the case of railways, since it involves multiple handling, there are delays. In the present scenario, consumers are extremely time-sensitive and particular. Due to a plethora of options available, they want the best product, at the best price, at the right time and place. Therefore, most people are in favour of deploying trucking services. Road transport is a more controlled and portable medium.

One of the most critical aspects where surface road transport scores over railways is that of pilferage. Skillful pilferage is still rampant in railways while it is negligible and very often controlled in the case of surface road transport.

Handling claims by road freight operators is smooth and settlements are done expeditiously while it is a cumbersome procedure to deal with the railways and its many zones in the event of claims indemnification.

The railways, most importantly, lack in providing an integrated transportation and delivery solution to customers. This is because there is absence of a seamless integration between the railways and the postal department.

Surface road transportation on the other hand, pioneers in offering not just goods transportation but an all-encompassing solution that includes bulk primary transportation, intermediate storage, bulk-breaking and express distribution of smaller consignments. As businesses seek to gain competitive advantage through cost-cutting measures, this becomes a vital aspect of transportation.

Surface transporttruckingis one of the oldest and most integral parts of the logistics industry. Logistics encompasses the utilisation of various modesroad, rail, air, and water. And the logistics industry is one of the fastest growing sectors in India. It is an integral part of any business.

Outsourcing logistics has become a trend as more and more companies are focusing on their core competencies. Logistics is a Rs 17,000-crore (approximately) industry and is expected to grow by over 20% every year in the next 4-5 years.

With competitiveness driving the market dynamics, Indian logistics companies are pulling out all the stops to garner market share, using everything from innovation to IT and time-bound service standards.

Therefore, it is incorrect to say that the trucking sector is losing its competitiveness to railways, as one needs to look at the overall competitiveness and the advantage of one mode over the other.

At this point of time, for various reasons outlined above road freight scores over railways on several counts.

The author is executive director, Transport Corporation of India Limited