Industrial demand drives tractor trailer boom

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The proposed policy on scrappage of old trucks may still be two years away but there’s already an unofficial scrappage policy kicking in in the truck sector thanks to pressure from high volume corporate clients. According to truck marketers, top transport clients like e-commerce, pharma and durables companies are now insisting that the trucks ferrying their goods should not be more than 5 years old. “The demand for efficiency, faster turnaround time and safe transport of goods is prompting large fleet operators to migrate to heavy duty trucks in general and tractor trailers in particular,” said Volvo Eicher Commercial Vehicles MD Vinod Aggarwal. What’s more, turnaround time has reduced roughly by 15% thanks to GST and better roads so the demand for greater efficiency is more.

Tractor trailers have seen the highest growth in FY17-18 at around 60% (from 52,761 units to 84,205 units according to SIAM data). The entire truck market has seen a turnaround for just over a year as big fleet operators upgrade their trucks to make the most of the lower turnaround time thanks to GST. Said Sethu Bhagavathula, chief technology officer, Ashok Leyland: “Turnaround time has come down by 15% prompting larger fleet operators to invest in new technology trucks. Fleet operators have become more profitable thanks to GST with turnaround times coming down. All new age companies in pharma, e-commerce, durables and retail sector now insist that the truck should not be more than five years old. As a result multi-axles, tractor trailers and tippers are seeing top gear growth.’’

Truck marketers say the focus now is on efficiency by the hour rather than by the day. With road infrastructure improving, higher tonnage vehicles are now in higher demand.

Industrial demand drives tractor trailer boom

Industrial demand drives tractor trailer boom

What have also helped are the new rules against overloading. “Overloading can lead to trucks being impounded or toll taxes being increased several times so fleet operators are now careful about that,’’ said Aggarwal. “Earlier the Rajasthan-UP sector was notorious for overloading but now even that sector is under control. Which is what’s making fleet operators upgrade their fleet.’’ Tippers are also in demand due to the infrastructure spend by the government, he added.

The trend has been fuelled by the fact that the contractual business which was a mere 7-10% just a decade ago is now 25-30%. “Earlier contracts were for 6 months, now industrial users offer dedicated business for 3-4 years but include contractual conditions like technical specifications, age of the vehicle, size, material of the container (aluminium, steel or insulated etc),” said SP Singh, senior fellow and coordinator, Indian Foundation of Transport Research and Training. As fleet operators look at greater cost efficiency, they are migrating to higher tonnage vehicles. “Those who were buying 31 tonners are now buying 37 tonners,’’ said Singh. “There is driver shortage in the market and you need 2 drivers both for 9 tonners as well as 49 tonners.’’ Higher tonnage fewer vehicles means lower toll and lower maintenance. Besides the trucks can also get return load on the open market. “So truckkers are looking for a flexible vehicle that suits both sides of the consigner and the multiple purposes of the tractor trailer make them attractive,’’ said Singh. Also with the dedicated freight corridor due to start in 2021 (Mumbai-Delhi), transportation will use DFC and tractor trailers to reduce logistic cost.
The situation is similar to what China witnessed about 10 years ago. The Chinese heavy duty truck market went from 200,000 to a million units strong in roughly a decade with half those numbers coming from tractor trailers. “India is going through that kind of growth right now after nearly 6 years of ups and downs and demand slump,’’ said Aggarwal. Despite clocking 19% plus growth in FY17-18, the industry is actually now at 2011-12 levels and discounts still continue. Globally tractor trailers comprise majority of the transportation segment. In Europe they comprise 75-80% of the market.

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