The November month saw truck freight rates stay firm, helped by increased cargo flow from factories and robust demand in the consumption sector despite a significant cut in diesel price.
An increase of 15-20 per cent in factory output due to increased consumer spending and peak marriage season coupled with shortage of truck fleet drivers during November helped truck rentals stay firm on trunk routes across the country. This is despite a substantial cut in diesel price November 3, 2021 by ₹12-14 per litre, according to IFTRT (Indian Foundation of Transport Research and Training).
Truck rentals saw an average increase of 12 per cent as of November 1 as compared to October 1.
Increase in revenues
As a result of the diesel price cut, rentals fell 8-10 per cent between November 4 and 10 but recovered about 4 per cent in the following week and rates remained stable after that. So, recovery in freight rates and a cut in diesel prices led to an increase in the revenue of truckers.
This buoyancy has led to almost double digit increase in sales of ILCVs (intermediate & light commercial vehicles) and HCVs (heavy commercial vehicles) during November 2021, it added.
Also see: Omicron fallout: Travel bans to threaten recovery in aviation sector, says IATA
Monthly average truck rental on Delhi-Mumbai-Delhi round trip on a 9-tonne payload truck was marginally down to ₹1,30,000 on December 1 when compared with ₹1,32,000 on November 1. Delhi-Chennai-Delhi round-trip rental was up marginally to ₹1,47,000 when compared to ₹1,46,500 and Delhi-Kandla-Delhi increased by 3 per cent to ₹1,70,000 on December1 from ₹1,66,500 on November 1.
Oil plummets
In the last 4 weeks, international Brent crude oil price has plummeted to $71/bbl from the previous peak of $85.5/bbl. Lower import prices may result in a further drop in diesel prices and truck rentals may soften a bit. However, given the buoyancy in industrial output, the larger benefit of diesel price reduction is most likely to be shared by fleet owners on the trunk routes.
The remaining part of the fiscal up to March 2022 is expected to be healthy for the economy as exports boom and despatches to APMCs of fruits, vegetables and food items are likely to be steady, it said.