Truck rentals bounce back as states ease COVID curbs; up by 14% in June
While there was no bar on freight traffic during lockdown, demand for goods transport by road had slumped due to the severity of Covid-19 second wave and its crippling impact on factory production. Couple with this, markets were under lockdown in key states. As the situation started improving significantly, truck rentals have staged a recovery from the decline of April & May.
After declining for two consecutive months due to the severe impact of the second wave of COVID-19, truck rentals are bouncing back.
Since the beginning of June, truck rentals on key routes across the country have increased by at least in the range of 9 per cent to 14 per cent. The revival was seen as demands increased when the second wave of COVID-19 started abating and key states implemented major relaxations in lockdown.
“The trend reversal comes after truck rentals declined from 18 per cent to 27 per cent in April, and further from 6 per cent to 8 per cent in May,” SP Singh, senior fellow and coordinator at the Indian Foundation of Transport Research and Training ( IFTRT) told The Federal.
Truck operators have been waiting for a recovery in demand as they were not only facing falling rentals, but also hike in cost of fuel as well as tyres. The hike in truck rentals during the past two weeks will help in covering the impact of higher fuel cost, but capacity utilisation continues to be a worry. When the COVID-19 second wave had created panic across major states like Maharashtra, Delhi, Karnataka, Tamil Nadu and Punjab, capacity utilisation of truck operators had declined to 40 per cent and now it has recovered to 65 per cent, Singh explained.
Going by current trends, the recovery will be gradual and capacity utilisation is expected to increase to 85 per cent only by the end of the current financial year.
IFTRT has estimated that factory output has increased 25 per cent in the past weeks, especially in the case of bulk goods, merchandise, durables and items of daily use. The increase in demand for movement of manufactured goods has led to higher freight rates. For example, tariff for a Delhi-Mumbai round trip now stands at ₹1,07,500 per truck, 11 per cent higher and the ₹96,500 charged at the beginning of June. On an average, the increase in the past couple of weeks is from 9 per cent to 14 per cent on important routes.
The recovery in freight may be only in some segments, according to Naveen Kumar of All India Motor Transport Congress. “But by and large, small operators are in deep trouble,” he explained as fuel price hike and lack of any relief from the government have become major points of worry. Truck operators have been demanding moratorium as they are finding it difficult to pay EMIs for their fleet. AIMTC has submitted several representations to the government seeking relief from high fuel prices and a breather from EMIs.
The improvement in demand and higher rentals have come as a silver lining for truckers who have been hit for a second year in a row due to COVID-19. Data from IFTRT shows that the rental for Delhi-Nagpur round trip has increased to ₹93,000 now as compared to ₹83,000 at the beginning of June, indicating an increase of 12 per cent. Similarly, the tariff of a Delhi-Chennai round trip has gone up by 12 per cent now to ₹1,35,500 now as compared to ₹1,20,000 at the beginning of June. In the case of Delhi-Kolkata round trip, the tariff has gone up by 14 per cent to ₹91,200 now as compared to ₹80,000 at the beginning of June. Rentals on the Delhi-Bangalore and Delhi-Hyderabad routes have increased by 10 per cent.
At this point in time, truckers are worried about continuous increase in diesel prices and the nearly 6 per cent increase in tyre prices within a fortnight. Trucks now carry nearly 78 per cent of the total freight traffic moving across the country while the railways account of the remaining 22 per cent. While the railways primarily carries bulk cargo like minerals, coal, fertilizers, food-grain and cement, other premium value-added items like automobiles, white goods and electronics are transported by road.
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