While diesel prices contribute around 40-45% of the cost of operations, demand contributes 10-15% of the increase in freight rates,” said Jacob KK, vice president operations, Patel Roadways.
After rising sharply at 13% during the last three months from August to October, truck rentals dropped 5% last fortnight over the rates in November due to oversupply of goods carriages, dampening of post Diwali spending, drop in cargo from factory gates and further softening of international crude prices, according to Indian Foundation of Transport Research and Training (IFTRT), the apex body which tracks the truck industry.
Truck rentals on Delhi-Mumbai-Delhi trunk route have dropped down to Rs 92,600 from Rs 97,500 in November, a drop of 5%. Similarly for Delhi-Bengaluru-Delhi, Rs 1,36,800 from Rs 1,45,500, down 6%. This is true for other trunk routes including Delhi-Chennai-Delhi and Delhi-Guwahati-Delhi.
“While, the freight availability from manufacturing sector particularly MSMEs has started coming down from the first week of November 2018, the departure of 15%-20% truck drivers on leave due to Diwali and Chhat festival, the shortage of drivers till mid November 2018 kept truck rentals for full truck loads in the open freight market range bound, however, in last fortnight truck rentals buckled under pressure of more fleet reverting to highways on trunk routes and oversupply of goods carriages on trunk routes has put pressure on truck rentals to fall by 5%-6% on trunk routes across the country,” IFTRT pointed out.
To put it in perspective, freight rates increased by 13% from August to October due to demand for truck fleet from rural economy, kharif food item procurement and festival season despite fall in international crude prices. “This is a very unorganised market with no fixed rule on freight rates. While diesel prices contribute around 40-45% of the cost of operations, demand contributes 10-15% of the increase in freight rates,” said Jacob KK, vice president operations, Patel Roadways.
The truck freight cost has more potential to fall provided the revised e-way bill format under GST regime is fully effective which should be bringing down the continuous evasion of GST due to dodging activities by unscrupulous transporters and their unholy alliance with ilk of unscrupulous traders, IFTRT further added.