Reduction in diesel prices unlikely to impact freight charges: Truckers

Vijay C Roy

Tribune News Service

Chandigarh, August 23

Despite two successive cuts in diesel prices in August, truckers lamented that they were not in a position to pass on the benefit to consumers. They are of the view that already freight rates have gone down by 20-22% due to low demand during April-July 2016 as compared to the corresponding period of the previous year and further cut in freight is next to impossible.

The public sector oil marketing companies cut the diesel prices by Rs 2 per litre on August 16. The price was also slashed by Rs 2.01 per litre on August 1.

Concerned over low demand, truckers are waiting for increased consumer spending on the back of 7th Pay Commission, good post-monsoon harvest in October and peak festival season. This will help the truckers have better fleet utilisation which currently stands at 40%.

“Overall there is a slowdown in the economy and it has affected the truck industry also. The demand for trucks stands at 40% currently, with 60% of the fleet being unutilised. With extremely weak demand for transportation, the freight rate has already gone down by 20-22% in the past one year,” said Bhim Wadhwa, president, All India Motor Transport Congress. The All India Motor Transport Congress (AIMTC) represents 75 lakh truckers in the country.

The truckers said heavy rains coupled with steep drop in cargo arrivals, especially fruits and vegetables by 25%, has also resulted in steep fall in business.

SP Singh, senior fellow and coordinator, Indian Foundation of Transport Research and Training (IFTRT), said, “While monthly revenue of truckers in the past 12 weeks or so have taken a plunge, it has direct bearing on heavy duty truck sales, which predominantly operate on medium and long haulage.”

He said, “In case of contractual transportation, the freight between transport contractors and corporate consignors are directly linked to revision in fuel price, which is 25-30% of truck freight business, while 75% of open market truck rentals are linked to vagaries of open market daily full truck loads known to truckers through truck unions. Due to heavy rains, truck rentals dropped by 1.5-2% during the first week of August. Further, the rentals for medium and long haulage are being quoted further lower by 2% at truck unions and by brokers in cities across the important freight centres due to oversupply of trucks.”