The incessant increase in truck rentals since the past 10 quarters has finally cooled off in the first half of this year, which saw a drop of 1-3.8% in freight charges compared to the same period last year.
According to Delhi-based research body Indian Foundation of Transport Research and Training (IFTRT) the drop in truck rentals has been experienced despite rail freight going up by 20% and the Rs 5 increase in diesel cost seen in the reporting period.
The last ten quarters witnessed a 30-35% increase in truck rentals over the back of steep increase in fixed and variable operating cost with a weighted impact of around 22-24% in the same period.
The truck chassis price, tyre price, interest cost, labour cost and fuel price have increased between October 2009 - March 2012. However, except fuel cost, rest of the fixed and operating cost for truckers too have relatively remained soft in last six months with vehicle manufacturers offering discounts on purchase of new vehicles, low interest cost and stable tyre prices.
"The truck rentals have dropped in H1'12 due to over heating of truck freight charges and over supply of truck fleet in the market accentuated by lower cargo offerings from manufacturing, fruit and vegetable and import export trade", stated S P Singh, Senior Fellow and Coordinator, IFTRT.
Although, the transport contract business is over 25% of truck transport business in the country and diesel price increase is part of the 'escalation clause' of the transport contracts between transport firms and corporates, thus the diesel hike is simultaneously reflected in the upward revision of contracted freight charges, but due to slow down in most of the sectors had led intense competition among the transport contractors to quote lower freight rates for annual rate contracts by 8-10% in more than 80% new contracts in the beginning of this year, stated the report.
"The diesel price hike in mid September resulted in knee jerk increase in truck rentals by 12-15% in the third week of last month, but immediately in the last month of the September settled down to an increase of 5-6% corresponding with actual diesel price hike impact", Singh further added.
