The decline in fuel prices in India, as a consequence of falling global crude prices, and a tepid growth in manufacturing and infrastructure sectors led to a slide in truck rentals in January, compared to the year earlier. While this is bad news for truck fleet operators, consumers are likely to benefit from lower retail prices of commodities like fruit and vegetables on account of lower transportation costs.
Truck rentals fell by 2.5% to 3.5% month-on-month in January across various routes in India, according to the Indian Foundation for Transport Research and Training (IFTRT).
On the important Delhi-Mumbai-Delhi route, which joins two of the country’s largest and busiest cities, freight rates fell by 3% to R60,500 per round trip. On the Delhi-Guwahati-Delhi route, which is the country’s most expensive vis-a-vis truck freight rates, rentals fell 3% over December to R1,03,800.
Lower diesel prices played a key role in declining truck rentals, with the oil marketing companies slashing prices of the fuel twice in December: Once by 84 paise, followed be another price cut of R2 per litre. However, increased transport of seasonal vegetables and fruit to wholesale markets across the country provided some support to truck rentals and prevented them from falling further.
Though the outlook on the Indian economy remains buoyant, it is yet to translate into increased investments in infrastructure and manufacturing, and resultant jump in output.
“The truck freight market is awaiting a quantum jump in cargo offering from the manufacturing sector and foreign trade, along with visible and sizeable investment in infrastructure projects,” IFTRT said in its latest report on the sector.
Sanjay Singh, senior fellow and coordinator at IFTRT, says that truck rentals are expected to remain low in the next few quarters as the sowing of Rabi crops (which are sowed after the monsoon and harvested around April-May) has been 5-6% lower than last year. “The agricultural cargo available for transportation will be less than expected and manufacturing and infrastructure sectors are also yet to see any significant growth.”
Truck operators are waiting for signs of a “genuine recovery in the manufacturing sector” before going ahead with fleet expansion plans.
“Two-axle trucks and multi-axle trucks are given national permits for 12 and 15 years, respectively. After the expiry of these permits, trucks can only move on local routes and most such trucks that are more than 15 years old are scrapped voluntarily by fleet owners themselves,” Singh explained.
