Truck rentals flat in January; sales tank 38% due to slowing economy

Tags: News
Truck rentals during January remained flat on prolonged dullness in cargo flow, while truck sales (5-49 tonnes category) continued to slide on slowing economy.

“The increase of 50 paise per litre on diesel during January 2013 following the government’s decision to deregulate diesel prices didn’t result in any increase in truck freight rates. Truckers were unable to pass this cost burden due to continuing sluggishness in the economy. During January, cargo offerings remained dull from manufacturing sector and import-export trade, while cargo flow from fresh fruit and vegetables (except onions), poultry and meat categories were buoyant on account of winter season. Thus, truck rentals stayed range bound (with +0.5 per cent or -0.5 per cent) on trunk routes,” according to a statement of IFTRT (Indian Foundation of Transport Research and Training).

However, flat trend in the truck rentals during December 2012-January 2013 improved margins of big transport firms and logistic firms that are having long term contracts with corporate consignors have comfortable cushion to pass on the cost pressures.

Truck rental on Delhi-Mumbai-Delhi round trip on a 9 tonne payload truck stood at Rs 54,000 on February 1, when compared with rate of Rs 54,300 on January 2. Delhi-Chennai-Delhi round-trip saw a marginal drop to Rs 83,200 from Rs 83,500 and Delhi-Kandla-Delhi trip rental stayed flat at Rs 41,300.

As the freight rates stayed flat and there is overall negative sentiment, the fourth quarter of current fiscal has not begun well for the truck makers as sales continued to decline for the 10th month in a row in the current fiscal.

Truck sales fell by 38 per cent in January, with heavy multi-axle trucks and trailers reporting 50 per cent drop as truck operators or fleet owners were wary of buying new purchases on doubts over economic recovery. The lower cargo offerings from manufacturing sector, particularly SME segment, also played the spoilsport. Besides, trucking industry is also saddled with over supply of truck fleet in the market and hence operators are not keen on buying new trucks that are now available at unprecedented discount levels of up to Rs 2 lakh per vehicle.

Total sales of the trucks stood at 19,431 units during January, when compared with 31,319 units in January 2012. All categories saw double digit fall in volumes. Light commercial vehicle (5-7.5 tonnes), intermediate commercial vehicles (8-14 tonnes), medium commercial vehicle (15-16.2 tonnes), multi axle vehicles (25.2-31 tonnes), multi-axle trailers (30-49 tonnes) registered a decline of 34 per cent, 21 per cent, 27 per cent, 50 per cent and 51 per cent respectively.

For the 10-month period of this fiscal, total truck sales dropped by 24 per cent at 2,12,135 units when compared with 2,78,703 units during April 2011-January 2012 period.

“In this time of crisis, trucking industry, which is facing low returns and shortage of drivers, needs an overhaul of strategy and policy change by the vehicle manufacturers, transporters and the government. As the government is proposing monthly increase in diesel price, the focus should shift on promoting fuel efficient trucks and curbing plying of overloaded trucks,” pointed out S P Singh, a truck industry expert of IFTRT.

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