To minimise the price fluctuation risk in road freight and provide a database of rates for major routes, the Transport Corporation of India (TCI) has come out with an index, Indian Road Freight Index (IRFI).
IRFI is an index of freight rate movements based on route density and dynamic freight rates of the major routes across the country, Vineet Agarwal, executive director of TCI said.
"IRFI is a weighted average of lorry freight rates across various routes and varies in proportion with the movement of freight rates and density of major routes across the country. At present, IRFI tracks the movements across 50 major routes in the country," Agarwal told Business Standard. He said the company would extend the index to cover 100 destinations, including movement to port towns, by October this year.
Explaining the index, Sandeep Gupta, deputy general manager, operations, TCI, said: "The IRFI is computed weekly by panelists who make an assessment of the freights that would be paid on that day. The information is collected through various brokers, cross-checked and then compiled."
Gupta said: "Once all the estimated numbers are received, the panelists calculate the average after removing the highest and lowest numbers. Once the component numbers are tabulated, they weigh the numbers and compile the IRFI for that day."
At present, the overland lorry freight industry is dominated by small regional operators. The major lacuna in the existing system is the lack of comprehensive information on freight rates and density of freight lorries on certain routes. This makes it difficult to predict the prevailing freight rates, the emerging trend in the lorry availability for a given period and analysis of freight rates. "As a result, the market over-reacts to issues like the oil price hike, where any increase in prices leads to an immediate rise in lorry rates," Agarwal said.
Saying this index was available to anyone at a nominal subscription rate, Agarwal added: "IRFI will be useful for cement, commodity and foodgrain companies. Since the immediate impact of seasonal and regulatory changes can be predicted by following previous trends, the index can also be used by financial institutions to monitor non-performing assets."
The financial institutions and banks give loans to truckers and operators for purchase of trucks. Once the truck movements start, part of the operator
