Fuel price trajectory impacting freight charges: CII Report

fuel price surge hits freight charges

CII Institute of Logistics released the compendium of logistics yesterday in the presence of Additional Secretary (Logistics), Ministry of Commerce and Industry, Amrit Lal Meena, throwing light on how the surge in fuel prices has snowballed to a 25-30% increase in freight charges.

Transportation is a quintessential part of logistics and the overall development of an economy. Logistics contribute ~6% towards the GDP, while it costs 12-13% of GDP in India, as compared to the global average of around 8%. The rise in fuel prices has and will, invariably lead to a subsequent rise in the cost of logistics. Furthermore, these numbers are pushed as a result of the under-utilization of resources in the sector, and there is an urgent need for attention towards increasing efficiency as well as sustainability.

As the report suggests, India ranks 44th on the Logistics Performance Index. This is due to the high cost of logistics, skewed modal mix, high over-heads due to lack of last-mile connectivity, and shortage of skilled manpower.

If one takes into account long-distance truck travel, 50 per cent of the cost goes towards fuel. This cost has to be taken from the customer and passed on to the supplier.”

~ Shankar R, Executive Director-India, TVS Supply Chain Solutions Ltd.

Also read: NITI Aayog report suggests solutions to save logistics fuel worth INR 311 lakh crore between 2020 and 2050

The CII Center of Excellence in Logistics and Supply chain facilitated stakeholder round-tables – in Maharashtra, Uttar Pradesh, Tamil Nadu, Assam and Haryana – and compiled a handbook of logistics policies, highlighting state policies and initiatives to cash in on the logistics and supply chain goldmine. This compendium is expected to be one of the key documents that would be very helpful for the logistics of all the State and UT Governments.

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