IFTRT says: Truck rentals down 2.5% in Feb
Truck rentals fell by 2-2.5% during February due to tepid cargo movement from various industrial centres in the country.
This led to a drop in full trip turnaround by another 5-10% on different trunk routes, according to the Indian Foundation of Transport Research and Training (IFTRT), an independent research body.
The rentals during February and up to March 1 were lower or range-bound against the same period last year, said IFTRT, adding that the trucking business is taking “more than expected time to recover” from the supply chain disruption caused by the demonetisation move.
IFTRT collects data in the highly fragmented road transport sector. Road transport, which accounts for almost two-third of the country’s cargo movement, is a key indicator of economic growth.
SP Singh, Senior Fellow, IFTRT said that “The fall in freight rates in this period is an aberration, as the data for previous years shows that usually truck freight rates tend to increase during the January-March period.”
Support from the arrival of fruits and vegetables into agricultural price marketing committees (mandis) remained flat following demonetisation, said the IFTRT, adding: “Fleet utilization remains jittery across the board, with trucking activity hitting the worst patch since 2008, if the festive period were to be excluded.
“In the period October 2016 to February 2017, if we remove the peak festival period of October 1-November 8, trucking activity hit the worst patch since 2008, when the economy was faced with global economic meltdown due to the mortgage crises in the US.”
Truck sales are not showing good growth as buyers expect the introduction of GST to bring in efficiencies in the road transport sector, leading to more work being done by the same number of trucks, thus lowering the demand for trucks.
The use of FASTags, which are pre-paid toll cards for payment in national highways, is also improving the capacity utilisation.
The National Highways Authority of India has sold 3.425 lakh such tags.
The sale of tags is further expected to go up with the Road Transport and Highways Ministry, along with other ministries such as Petroleum and Consumer Affairs, encouraging truckers to pay tolls electronically.
There will be soon be an administrative order asking the Food Corporation of India to also pay tolls electronically, said official sources.
Tag Keyword: Truck Rentals , IFTRT , Freight Rates , Economic Growth , GST