Indian trucking to bounce back in 2021 with faster growth rate: Ken Research

Indian trucking Bounce back in 2021 with faster growth rate- “India Road Freight Market Outlook to 2024 – Driven by BS-VI Norms, revision in Existing Axle Norms by the Government and Technological Advancements”

June 13, 2020: Indian Trucking Analysts at Ken Research in their latest publication “India Road Freight Market Outlook to 2024 – Driven by BS-VI Norms, revision in Existing Axle Norms by the Government and Technological Advancements” believe that the road freight market in India will revive back in 2021 with a faster growth rate.

The analysts reasoned it as due to government spending on roads, ports and inland coastal shipping to reduce congestion in metropolitan cities, increasing e-commerce sector, revised axle norms that have reduced freight cost and increased the capacity of trucks in India.

Future outlook & projections:
The trucking industry in India will be impacted by Covid-19 in the country and is expected to grow much faster. The truckers who have bought trucks with 50-100 percent institutional finance will see a tough time and need to maintain 90 percent capacity utilisation for upcoming EMIs, Insurance premiums & Permit with same freight cost despite high diesel cost. This is due to disturbed production-consumption cycle with only 30 percent of trucks operating with cut-throat competition for loads. Increasing Demand of e-commerce products, growing Reefer trucks, technical innovations such as E vehicles, Fleet Management Software and more are disrupting the competition space.

Trends among major players
The trucking industry in India is extremely fragmented in nature. The trucking industry is dominated by local domestic players who have a large number of fleets and providing competitive prices. Big companies such as Mahindra and All Cargo are moving towards the asset-light model, subcontracting with local transport vendors and provide Value added services such as kitting, assembling, packing and other which are very important in the road freight market. Online platforms such as Blackbuck, TruckOla, Rivigo and many more are disrupting the logistics space. The major players in the India road freight market include GATI, VRL logistics, TCI, Om Express, DGFC, Varuna and Express logistics.

Reasons for faster growth

  1. Increased government spending

The government under the budget of 2020-2021 has allocated Rs 170,000 crore for transportation which is 8 percent higher than the budgetary allocation of 2019-2020. The National Infrastructure Pipeline for 2019-2025 pegged the projected capital expenditure for Transportation (covering roads, railways, ports and airports) at about Rs 35.7 lakh crore. Various efforts include Bhratamala Pariyojana and the Sagarmala Project and Bangalore suburban transport project.

  1. High seasonal demand variation

The demand for trucking in India is the highest during festive months (Sept, Oct, Nov, and Dec) and harvesting months (February to April) where the occupancy of trucks can rise by 30-40 percent along with freight fluctuations of 6-7 percent in comparison to normal freight rates prevailing in the trucking Industry.

  1. Change in government regulations

The government is constantly changing the regulations associated with trucking industry such as restriction of trucks above the age of 15 years to phase out older & polluting vehicles from the country. GST has shifted all manual transactions to digital mode with e-way bills and Fastags ensuring more transparency into the system. The government has even revised Axle norms to increase load capacity that has impacted Small fleet operators negatively.

  1. Improving cold transportation

India exports a huge variety of fruits and vegetables which require cold chain services which are extensively being used nowadays in India. In spite of huge cold storage capacity, the country still lacks in cold transportation services with only 30k refrigerated containerized trucks available on road. In the past few years many food and meat processing companies such as Hibachi, Tendercuts, Zappfresh and more who require Cold transportation is being catered by many cold transporters such as GATI KWE, DHL Smart trucking, Snowman, Coldman logistics and more providing Integrated Logistics Solutions and positively impacting road freight market of the country.

Indian logistics market
India Logistics Sector has witnessed a robust CAGR with the highest share to freight forwarding market followed by warehousing, courier parcel and express market and VAS Market. Road freight is the dominant mode with transportation to domestic flow corridors and international neighbouring countries also. Many real estate developers such as Indospace, Logos India, ESR and many more are making constant investments in the warehousing market in Gurgaon, Chennai and Mumbai. E-commerce sector is becoming extremely popular with the introduction of online payments such as Amazon Pay, Paytm, Gpay and new popular delivery apps.

Indian road freight market
Small fleet owners dominated industry (70 percent of all fleet) operating at a margin of 8-12 percent and average transaction days of 12-15 per month. SFOs primarily operating on spot bookings while MFOs and LFOs working on LHAs. Indian road freight market has witnessed an average CAGR during 2014-19 due to revision in BF VI norms, scrappage policy, GST and new axle norms from the government with a rise in average highway construction of roads.

The developments of Bhratamala Pariyojana and the Sagarmala projects and the Eastern and Western Dedicated Freight Corridors, developments of ports along with Public-Private partnership Projects has stimulated the growth in the market. On the front of assessing seasonality fluctuations in demand, freight rates usually high during the festive season in September-December with WAFC being Rs 2.58/tonnes/km in 2019.

Indian road freight market segmentation

  1. LTL and FTL

The road freight market is dominated by FTL by revenues and by volume. The average freight cost charged for LTL is higher than FTL due to additional risk in carrying multiple loads, higher insurance cost and more.

  1. Type of trucks

There are 12 million+ trucks in India, with net additions of over 6 lakh trucks in the market annually and there exist 40+ variants of trucks in the market. The country is dominated by light goods carrier vehicles in comparison to high goods carrier vehicles. The ratio of LCGV to HGCV is around 6:5. The LCGVs is expected to remain the dominant category in India trucking market.


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