The Delhi-Mumbai Expressway will not only boost express deliveries like e-commerce and food perishables, but also improve profit margins of logistic players, owing to better fuel efficiency and lower transit time allowing truckers more trips.
businessline spoke to logistics companies and analysts, who point out that the 1,386 km-long India’s largest greenfield access-controlled expressway will reduce operating costs in the range of 15-20 per cent.
Fuel accounts for 60-70 per cent of the total operating costs. However, savings will depend on the distance and the kind of delivery a truck makes. For instance, express deliveries get better savings but toll charges are higher at ₹6-7 per km against ₹4-4.5 per km on normal expressways.
Jagannarayan Padmanabhan, Senior Director, Crisil Market Intelligence and Analytics says the expressway will reduce transit time and operating costs as there will be lesser stoppages leading to better fuel efficiency.
Optimising costs
Better highways lead to a reduction in transit time, but this does not necessarily translate to cost saving for the transporter, points out Prasanna Pahade, Vice President (Auto and Farm Business) at Mahindra Logistics.
Express delivery is likely to be the first to move here, as customers are willing to pay more for faster service in lieu of saving time. With blended rate for full truck load being ₹4 per kg, partial truck load ₹6-8 and express delivery ₹10-12, there is an economic benefit in terms of fuel versus toll, he explained.
Another category, Pahade said adding, speed trucking where two drivers are deployed to save time and customers are willing to pay more. These trucks have the potential to move on expressways because it is aligned in terms of how they get paid.
However, for other types of transportation services, the decision to use toll roads and expressways will depend entirely on the cost of tolls, fuel efficiency, and transit time, he added.
Digital freight platform Raaho’s Co-Founder and CEO, Imthiaz, says, for truckers, there are 2-3 big running costs. With good roads mileage goes up. For a multi-axle 32-feet truck, capacity 15-18 tonnes, the mileage is typically around ₹4.2 per km with diesel.
On expressway roads, the mileage is going up to ₹4.6-4.7 per km, which is fairly good. So, efficiency gets better by around 10 per cent. The cost per km comes to around ₹19 per km from ₹22-23 per km based on mileage and taking diesel roughly at ₹100 per litre. So saving is ₹3 per km. If a trucker travels all the way to Mumbai from Delhi, then he also travels less by around 100 kms. Putting it down in Rupees suggests there is a total saving of ₹4,000-4,500, he added.
“Another big cost for the truckers is tyres. The tyre cost comes to around ₹1.5 per km. Our data says this will go down to around ₹1.2 per km, which is a good saving of 10-20 per cent,” Imthiaz said.
For comparison, Padmanabhan explains that approximate operating cost per trip for a transporter plying a 10-wheel 28 tonne rigid vehicle on Mumbai-Delhi route via Surat-Vadodara-Udaipur-Jaipur corridor is ₹65,000-70,000 (includes fuel, maintenance, toll, tyre cost and driver salary).
“As per our estimates, cost savings could be in the range of around 18-22 per cent (excluding value of time savings) when assessed as per IRC SP:30-2019 guidelines for economic valuation of highway projects in India,” he added.
Trips and tolls
Pahade said that over a longer period if more trips can be done in the same period, this will help in reducing the cost as fixed costs have gotten spread over a higher number of trips. “So, if a trucker reaches the destination faster than if in a month one truck does around 9,000 kms, which goes up to 11,000 km then this is a big jump,” Imthiaz pointed out.
However, the toll cost is going up. So, the toll cost for a truck is ₹4 per km on a normal expressway, this is going to be around ₹6-7 per km, he said.
Pahade agrees that most highways, irrespective of their length of use, charge a certain amount which results in a relatively higher charge for someone who uses the highway for a short distance.
A new development is the toll system on Mumbai–Nagpur Samruddhi highway, which charges toll on per-km basis providing truckers with greater incentive almost like pay-as-you-use, he added.