Indian Foundation of Transport Research and Training (IFTRT) is anticipating a 10-12 percent dip in freight rates on key trunk routes in the upcoming few weeks. The reduction in the State VAT rates is an additional but significant element of this change and the effect is expected to topple towards the prices of consumer goods as well.
While the truck rentals throughout the country plunged due to the ongoing pandemic until April, the sector has seen a steady rise since July this year. There will be, for the first time in 5 months, INR 5.7-6.3 per litre (petrol) and INR 11.16-12.88 per litre (diesel) depreciation in the prices following the excise cut.
Mr. S.P. Singh, a senior at the IFTRT, said that as the festive season is ending, there is a 30-35 percent decrease in freight volume, which along with the dip in fuel prices, will induce atleast a 12% slump in the freight rates. High utilization on key trunk routes (medium and long) resulted in a hike of 10-12 percent by truck operators during October – more than double the ascent in fuel prices.
We will have to wait and watch as not only has the Centre reduced excise but several states have reduced VAT too. The gap between freight and diesel prices will be determined by demand-supply dynamics, which will find a balance in the coming days.”
~ Hemant Thakkar, Director, CRISIL
Some sector-watchers have condemned the dip if fuel prices to be singular factor in the decrease of freight rates and have suggested the demand and supply factors to be key stimulants.
We expect both contract and spot prices to cool. Most importantly, it would bring back truck operators who have been off the road due to high fuel prices
~ Sachin Haritash, Founder and CEO, Mavyn
Trucking companies across the nation have welcomed the changes in fuel prices and VAT rates as operational costs had become exorbitant lately. They expect the industry to immediately respond to the cutbacks, bringing down the cost of fruits, vegetables, poultry and dairy products the most.
Also Read: Fuel price trajectory impacting freight charges: CII Report (logisticsinsider.in)
