Road freight drops 3-5% on low demand

After an 18-month gap, freight rates for road transport are on the slide.

Low demand for bulk cargo and over-capacity in the road transport sector have led to a drop in the rates on the trunk routes by 3-5 per cent this April.

Reduced demand from the agriculture sector, especially fruits and vegetables, has contributed to the slide. Experts say over-capacity due to addition of new high-tonnage vehicles in the past few months has aggravated the problem.

According to data compiled by the Indian Foundation of Transportation Research and Training (IFTRT), a voluntary organisation, the Delhi-Bangalore-Delhi freight rate has dropped by 4 per cent to Rs 75,800 per round-trip.

Similarly, on the Delhi-Guwahati-Delhi route, freight rate has dropped by 5.25 per cent to Rs 88,300 per round-trip.

"The drop in the availability of seasonal fruits and vegetables, along with low agriculture production, caused this reduction. We are expecting truck rentals to go down further due to overall reduction in the bulk cargo, both in the agriculture and the goods market," said SP Singh, coordinator, IFTRT.

"The over-capacity in the transport sector is leading to a fall in freight prices. The new trucks with higher load-carrying capacity are taking bulk cargo at lower freight charges," said Gurinder Pal Singh, president, All India Motor Transport Congress.

This has also seen a drop in the sale of commercial vehicles in April this year.