In a tell tale sign of economic slowdown, truck rentals across the country have fallen by 8-10 per cent in the first quarter of the current fiscal after having witnessed a rise for close to three years.
As the waiting time for their return trips grows longer, truckers are grappling with the problem of lesser trips, according to a research report by financial services firm Prabhudas Lilladher Private Ltd (PL), Mumbai.
In its report, PL said that during the April-June quarter, the truck rentals fell 8-10 per cent on the trunk routes compared to the cumulative increase of 30-35 per cent in rentals in the past 10 quarters (October 2009-March 2012).
Cargo offerings from the manufacturing sector declined by 10-15 per cent. The SME sector, which accounted for about 70 per cent of the load from the manufacturing sector, took a massive hit due to the 8-10 hour power cut every day in a large number of states.
What further compounded the misery of the truckers was the sharp fall in the arrival of fruits and vegetables during the summer season in the APMCs (Agricultural Produce Market Committee) by 25-30 per cent and the export-import cargo movement shrinking by 3-5 per cent.
Positive trends
The research report cited some positive trends, though, but these were confined to certain states.
In June 2012, cement despatches moved up by 5-7 per cent in different zones.
There was higher consumer spending in wheat procurement and the arrival of mango crop ensured “relatively smooth’’ cargo flow in Punjab, Uttar Pradesh, Andhra Pradesh, Eastern Rajasthan, Haryana and parts of Bihar. But the cargo flow from SMEs fell 25-30 per cent.
Round trip rentals
The report cited the round trip (9 tonne pay load) rentals from Delhi to key cities like Mumbai, Kolkata and Hyderabad falling by 2 per cent and to cities like Nagpur, Guwahati, Chennai, Bangalore and Kandla by 3 per cent in the month ended July 3, 2012.
It said that some of the big manufacturing units produced increased numbers “to refurbish their Q1 results for the current fiscal’’ because of which there was higher inventory pile-up at the distributors/wholesalers level.
Explaining the industry scenario, the report stated that the truckers had to wait for two to three days for return load compared to the normal waiting of 12-16 hours.
Shortage of cargo in many industrial hubs and various APMCs led to a 10-15 per cent fall in trips on the trunk routes in April-June 2012 quarter.
Decline in truck sales
This has caused slowdown in the purchase of new trucks in spite of the substantial discounts by dealers and subvention to financiers to ensure competitive EMIs to lure fleet owners.
This was borne out by the decline in truck sales in the three months of the first quarter of the current fiscal —15.3 per cent in April, 14.9 per cent in May and 20.05 per cent in June.
The report said the interaction with Sundaram Finance and Tata Motors “suggested that the growth would be flat in medium and heavy commercial vehicles, mainly led by H2FY13E, and H1FY13E is likely to be muted’’.