Truck Rentals down by 15% from Nov to May

The ongoing slowdown in factory output and the increase in cargo capacity — thanks to the new axle norms — has hit freight rentals by 13%-15%. According to Indian Foundation of Transport Research & Training (IFTRT), truck freight rentals are down by 15% from November to May end with the monthly drop averaging around 2%-2.5%.

Chennai: The ongoing slowdown in factory output and the increase in cargo capacity — thanks to the new axle norms — has hit freight rentals by 13%-15%. According to Indian Foundation of Transport Research & Training (IFTRT), truck freight rentals are down by 15% from November to May end with the monthly drop averaging around 2%-2.5%.

Truck rentals down by 15% from Nov to May

The worst affected is the North to East and North to North East routes where cargo movement saw a sharp drop.

“There were no major diesel fuel price hikes in April and May due to the elections but still freight was down by 13%-15%. Cargo offering has seen a sharp drop from November 2018 onwards and in between the diesel price went up but truck rentals did not,” said SP Singh, coordinator, IFTRT.

For fleet operators and truckers this has meant a sharp drop in monthly revenue.

“The truck that would earlier make 3 trips in a month now makes 2 and transporter revenue has fallen by about 30%,” said Singh.

Both factory output as well as infrastructure spending is down but what has compensated for some of that drop is the ongoing agri produce movement. “Wheat harvest is over but summer fruit and vegetable load continues and the mango season will go on for another 2 months,” said Singh.

“This is partly compensating for the drop in factory load and infrastructure-related cargo.” However, the agri cargo makes up for just about 50% of the total shortfall. And e-commerce, which is doing well, comprises just 5%-6% of the total cargo pie. “It has made a difference to the medium and intermediate truck sales because it is the containerized vehicles that are getting into that segment,” said Singh.

Worse neither truck makers nor transporters see a revival before the second half of the year. “Factory output and consumption are both down and Q4FY19 was the worst in terms of demand for trucks. But there will be pre-buying tail wind on account of BS6 so things should improve in the second half of the year but commercial vehicle (CV) industry is cyclical and we’re in the 7th year of growth so we can see de-growth next year,” said Girish Wagh, president, commercial vehicle business unit, Tata Motors.

Indeed while the cargo off take slowed down in medium and heavy trucks, the sales volumes in small CVs too have tapered down, he explained.

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