Logistics Sector Sees a Slowdown: Truck Rentals Dip in November

The Indian logistics sector, which had experienced a surge in demand during the festive season, has witnessed a significant slowdown in November 2024. According to a monthly report released by Shriram Mobility, truck rentals have declined across most trunk routes due to softened demand for transportation services.

Truck fares (roundtrip) on major routes such as Delhi-Chennai-Delhi Delhi-Bangalore-Delhi decreased by 1.4 percent and 1 percent, respectively, month-on-month (M-o-M) basis IV) Truck ban in Maharashtra. This is due to election activities and reduced agricultural product traffic.

The majority of trucks in the business are BS-IV compliant, and with the entry ban in the NCR region, these trucks are now transporting goods only up to the NCR border. From there, smaller BS-VI or compressed natural gas (CNG) trucks deliver the items within the region, resulting in increased logistics costs. Additionally, polling activities in Maharashtra slowed down logistics operations, further impacting truck rentals.

By November 2024, vehicle utilization levels had dropped to around 60 percent on an M-O-M basis. This decline is a clear indicator of a slowdown in logistics. Y.S. Chakraborty Managing Director and CEO of Sriram Finance Company Limited said, “Logistics festivals have faded away. Private consumption, which accounts for 60 percent of GDP, rose 6 percent from 7.4 percent in the first quarter, mainly due to borrowing costs. and weak real wage growth. This is despite rural demand recovering.”

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It was also observed that in November 2024, the automobile sector level was uneven. Two-wheeler sales increased by 27% on an M-o-M basis, this can be attributed to carry-on sales of Deepavali which took place on the last day of October. The agricultural tractor segment also posted a solid monthly of 29 percent and a favorable monsoon and expected the output of agriculture with the Rabi harvest in December and January.

On the other hand Sales for the Passenger Vehicles segment were down considerably whereas car Sales were down by 36% M-o-M due to the withdrawal of festive offers by car manufacturers. Of the subcategories, commercial vehicles were down with bus sales decreasing by 32 percent.

The trend of a constant decline in sales was observed until October, except for some RSOP offers they were making during the festive season. Specifically, the car segment registered an M-o-M sales contraction of 38 percent for new EV cars in November and 19 percent for two-wheeler EVs. This could only be if the new two- and four-wheeler EVs to be launched soon will give a fillip to sales in the next couple of months.
Month on Month, diesel consumption went up by 7 and petrol consumption went up by a negligible 0.3 in November 2024. The REFUELNSE transactions were up 4 percent, reflecting greater traffic on the FASTag. Alternatively, the total toll collection value declined by 0.7 percent on an M-o-M basis implying that the shorter trips or; toll charges may be low for small vehicles as opposed to larger ones.

Overall, the logistics sector is experiencing a slowdown, and it remains to be seen how the sector will perform in the coming months. The government’s efforts to boost the economy and the upcoming launches of new EVs may help revive the sector, but for now, the outlook remains cautious.

Reference By:- https://www.business-standard.com/