 "Truckers are neutralising this fall in dispatches through higher loading of agricultural produce, with early harvesting in this rabi season. Agricultural goods are exempt from GST and do not require generation of e-way bills")
Truckers have started charging transport operators higher than before, so much so that they are recovering the increased cost due to diesel price rise, data maintained by Indian Foundation of Transport Research and Training (IFTRT) shows.
However, the body of transporters, intermediaries and logistics operators, the All India Motor Transport Congress (AIMTC) has denied these claims, saying that a major part of fuel price rise happened in September, and it is hurting the business.
A peculiar situation has arisen, where truck owners have passed on rising fuel prices to their customers, namely transporters, while the latter are unable to increase the charges they apply to their customers, such as manufacturers, food traders, etc.
In short, the small organised and unorganised transport businesses have taken the brunt, while the individual truck owners and big logistics players have been saved from the shock, the former since they play at the unit, the latter due to economy of scale and large contracts.
Diesel prices in Delhi have risen by Rs 11 per litre in the first eight months of the year (and by more than Rs 14 to date). To make a Delhi-Mumbai-Delhi round trip, the cost increase was Rs 6,930.
However, the rent of a truck for plying on that route increased by Rs 9,900 in the same period, from Rs 81,000 on January 1, outpacing the increased cost due to higher diesel price, the data shows.
Due to an unprecedented rise in consumer demand vis-à-vis supply of truck capacity, truckers were able to raise prices and absorb a higher fuel cost, S P Singh, coordinator at IFTRT, said. The institute maintains a repository of trucks plying along the busiest transport routes in the country.
"Though the second quarter of the financial year has traditionally been lean with regard to consumption, we are seeing a month-over-month growth in consumer demand this time, for the first time in the last few years," he told Business Standard.
In 2018-19, truck sales have shot up phenomenally. Sales of medium and high commercial vehicles have increased 63 per cent, while those of light commercial vehicles, by 36 per cent, over a low base of last year owing to demonetisation and GST.
However, the transporters' body, intermediaries and logistics operators, the All India Motor Transport Congress (AIMTC) has denied these claims, saying that most of the fuel price rise has happened in September as well, and it is hurting the business.
"Diesel price is increasing continuously this month, around Rs 5 till date (month to date), and it is (proving) detrimental to our operations. If the government does not consider reducing (fuel prices) soon, we may have to think of another chakkajam in future," Kultaran Singh Atwal, chairman of AIMTC said in a release.
The AIMTC had mobilised its members for a blockade at the end of July, but had called off the strike after some promises from the finance and road ministries.
Contradicting IFTRT's data, Atwal said that the actual rise in fuel costs for transport companies has been higher than that experienced by the truckers due to a variety of factors, and that it is increasing daily.
"Delhi to Nashik used to cost us about Rs 40,000 per trip at the end of August. IT now costs us Rs 45,000 or so," he said. Apart from diesel, expenses such as safety and security of the goods, administrative costs too add up for transport companies.
In addition, the border posts have resumed operation on the borders of Madhya Pradesh and Chhattisgarh, resulting into increased costs in form of bribes and diesel burning, and wastage of time.
Based on the IFTRT data on rise in truck rentals, a Kotak securities report says that these figures indicate a strong recovery in demand. The same period in the last financial year was marred with the after effects of demonetisation and GST implementation, and economic activity had suffered.
This year, manufacturing activity has picked up and industrial segments of capital goods and consumer durables have shown improvement. Capacity utilisation is also improving, as per Reserve Bank of India's survey data.
"In addition to an uptick in economic activity, we had surplus in crop production and horticulture as well for consecutive years. This surplus produce might get a less price, but nevertheless gets transported," said IFTRT's Singh.
Food products form about 35 per cent of the volume of transport, though the value is not commensurate to the proportion in volume he said.
AIMTC chairman Atwal said that though the demands pertaining to national permit and driver constraints are being resolved, serious issues relating to insurance premium and toll plaza abolition still remain unanswered from the government. And now, diesel has started pinching harder.
