Delhi bans entry of commercial vehicles running on petrol and diesel: Will logistics be impacted?

delhi bans commercial vehicles till 3rd Dec

Ever since Diwali, AQI levels in Delhi have seen a sharp rise the city has been battling with heavily polluted air. The most recent addition to the series of remedial actions over the last couple of weeks is the ban on entry of commercial vehicles running on petrol and diesel in the national capital, with an exception to those carrying essential goods. In a press briefing after the high-level meet of stakeholders to control air pollution in the national capital, Gopal Rai, Delhi Government’s Environment Minister said, “From November 27, only CNG-run and electric vehicles, barring those engaged in essential services, will be allowed to enter Delhi. All other vehicles will remain banned till December 3.” It was assumed that there will be a complete ban on all petrol and diesel vehicles. However, the minister during the press briefing itself later clarified that it is applicable only to trucks, tempos, and other transport vehicles and not to all vehicles. 

The capital is one of the busiest commercial destinations in the country. Although in the last 5 years, most of the supply chain hubs (warehouses, packing and sorting centres, fulfilment centres etc.) have moved towards the periphery, yet the interaction with the bustling main city remains unavoidable, especially in the case of last-mile delivery. Moreover, with the surge in quick commerce activity, the city holds a vast network of ‘dark stores’ to meet the promise of the quickest deliveries in the history of online shopping.

According to an industry player, the decision to ban diesel and petrol commercial vehicles until 3rd December will not have a profound impact on the overall working of the supply chains for many businesses. But at the same time, we cannot overlook the speed-bumps this decision creates – especially for small and medium businesses – even with the presence of a considerable fleet of CNG and electronic vehicles plying in the capital. Plus, there is also the fact that the standing time of the diesel and petrol vehicles adds on the idle capacity which ultimately leads to an increase in turnaround time and logistics costs at the end.

Another source from a prominent logistics service provider said that banning commercial vehicles running on petrol and diesel is an ad-hoc solution to a rather permanent problem. And rightly so, because the uptick in pollution during the last 3-4 months of the year is not something new that the city deals with – it has been recurring for a long time now. Although the entry restrictions will definitely result in a drop in the pollution levels of the city, it is more of a temporary solution. For brick and mortar stores, the ban will result in a higher time to market which also will increase the cost of logistics, ultimately to be borne by the consumer.

It becomes quite evident that although the restrictions on commercial vehicles have been implemented with the aim to help improve the air quality, they eventually have a bigger negative effect on the entire logistics system. In the highly unorganized transportation sector of India, the greatest impact is on small businesses that are already running with marginal profits and trying to survive the aftermath of the pandemic. To ensure that they don’t lose customers, many did not even increase freight rates even with their fixed as well as operating costs skyrocketing due to fluctuating fuel prices and increased cost of vehicles.

A trusted source explains that such restrictions – especially in a centrally located and highly active logistics hub – hits at an entirely different magnitude. Cargo that used to reach its final destination in Delhi from Mumbai in about 4 days via road, will now take a couple of days more at the minimum. First, the bigger truck will be unloaded at a warehouse outside the city (unloading costs, warehousing costs), then it will be loaded again on a CNG/Electric vehicle and carried into the city (loading costs, additional transportation cost, cost for hiring additional vehicle). This will not only increase the time to market but repetitive loading and unloading of cargo will also increase the chances of damage in transit, especially for fragile and perishable cargo.

Though there have been a few policy changes keeping in mind the environment and the State Government has also been pushing on the shift to electric vehicles, however, urgent and stringent actions are needed to cope up with the seasonal pollution crisis that the city faces each year.

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