Freight rates soar for corporates

Trucking and transportation companies have hiked freight rates in the wake of the sustained rise in the cost of transportation fuels.

Gati, the second-largest logistics company, has increased freight rates by 12 per cent, on an average. The increase is applicable to its card rate customers as well as customers who have long term contarcts, a company official told Business Standard, adding that the move was prompted by the rise in diesel prices.

Goutham Bhattacharya, general manager incharge of sales and marketing at the cargo and courier company, DTDC, said that a 8-12 per cent hike in freight rates is on the cards.

"We are in the process of revising prices upwards. The exact timing of the hike will be determined by how the market is moving," he said.

But Bhattacharya said DTDC will introduce some value added services to soften the blow ofthe price hike.

Tulsi Mirchandaney, senior vice president of marketing and projects at Blue Dart Express said: "Blue Dart has a fuel surcharge mechanism which has been in effect since December 2002 to neutralise the erratic movement of fuel prices. The percentage of the fuel surcharge is linked to the international price of fuel and may increase or decrease depending on the average price of fuel for the previous month."

Transporters In Gujarat are demanding a revision in the freight rates.

The demand for a revision of contracts has gained pace because the prices of diesel have not been reduced, although the price of petrol has been reduced.

Transporters in Rajkot have already given an ultimatum to the region's industries, saying the revised freight rates will be effective from November 16.

Meanwhile, Rajot trukers have called upon transport associations of other districts to revise their freight charges as well.

The Rajkot Goods Transport Association (RGTA) has already announced an increase in contract rates with various companies. The Rajkot association is seeking about an eight per cent hike in the freight charges, in line with the recent hikes in diesel prices.

The increase in the diesel price by Rs 2.12 a litre makes diesel available for Rs 30.09 per litre and transporters say that this hike is the steepest in the last many years. The members of RGTA are mainly engaged with moving minerals and lignite for thermal power stations also from mines of Saurashtra and Kutch.

Mukesh Dave, general secretary of Akhil Gujarat Truck Transport Association (AGTTA) told Business Standard, "Increasing number of toll booths on highways had already increased our cost by about five to ten per cent depending upon the destination. The truckers in open market have already increased the freight charges according to the hike in diesel prices. The transporters working under contracts with industry had not been able to increase their fares due to the terms set by the consigner. It is unusual to demand for a revision of agreement during the on going term but this time it seems inevitable for us."

At present, the freight charge between Ahmedabad and Rajkot is about Rs 1800 to Rs 2000 per ten tonne of cargo. Similarly, the charges for Ahmedabad-Vadodara and Ahmedabad-Surat are Rs 1800 to Rs 2000 and Rs 3700 to Rs 3900 per ten tonne respectively.

"Surprisingly, there is disparity between diesel prices across the nation. The diesel in Daman is about two rupees cheaper than that of available in Gujarat. In this case it is difficult for Gujarat based transporters to compete with the trucks coming from other states or areas. We are planning to bring it to the notice of authorities," said Dave.

"We have been approached by Rajkot Association to co-operate with their agitation by a written appeal. The things will become clear as soon as the market in state will start working in full swing after festive fever. We will discuss the issue with members and decide how to co-operate with the demand of revising the freight charges agreed in contract," said Madan Jain, president, V V Nagar and Anand Transport Association.

The industry is yet to chalk out a strategy to the transporters demand. "We can not transfer the additional burden on customers. We are not sure how we will adjust this. We may have to pass on at least 50 per cent burden on end user in case we have to agree with the truckers," said Nambiar.