Part Truck Load Market in India: Waiting for a rejig?

The Indian trucking industry is a complicated one – it is segmented by destination (Domestic and International/Cross Border), freight load (Full and Part Truck Load), as well as by End User (Manufacturing and Automotive, Oil and Gas, Mining, and Quarrying, Agriculture, Fishing, and Forestry, Construction, Distributive Trade, Healthcare and Pharmaceutical, and Other End Users). And being highly unorganized adds to its woes. In this feature, we make an attempt to gauge the trucking industry with respect to the Part Truck Load (PTL) freight market in India, its pain points and the silver linings.

The Indian road freight transport market constitutes a share of 85% of the entire logistics sector, and is expected to grow at a CAGR of 6% during 2022-2027. It went through severe ramifications during the pandemic with only about 20% of the country’s entire fleet of trucks being allowed to operate during the first ever lockdown, and the damage trickled further with subsequent ones. The Indian freight industry is today akin to a jigsaw puzzle – waiting for perfect fits among the several oddly shaped scattered pieces of suppliers and buyers rather, truckers and shippers, for the perfect interlocking or optimized operation.

At the center of this commotion are three key variables that get impacted directly – Utilization, Load Factor and Empty Miles. When demand is not discovered – when a shipper is unable to find a truck despite it being available – utilization suffers and the truck remains idle while EMIs of truck finance keep moving. Lower utilization also means lower payout for the dismayed driver and added scarcity of manpower for the trucker. Eventually it leads to higher cost for truckers as well as shippers. When the Load Factor is less than 100, capacity is wasted and artificial scarcity of supply is created. Coming to Empty Miles, the productivity reduces, while fumes per freight unit increases. Empty miles is essentially a result of the fragmented industry being guided by the 2 million Brokers – almost like blind leading the blind. These Brokers – in absence of any digital platform – are blind to the many shippers and truckers available on a real-time basis in close vicinity and on the same route.

Bal Malkit Singh, Chairman – Core Committee & Former President, All India Motor Transport Congress (AIMTC) establishes the following reasons for the bad health of Indian trucking industry –

  • Unhealthy competition between roads and railways, and within the road transport segment
  • Freight depending upon demand & supply forces, and not on cost
  • Rising vehicle cost, fuel cost and other components like toll, insurance, taxation & en-route corruption
  • Skewed transport operations – focus on long haul, and first & last mile delivery.

However, in recent times, there have been a gamut of initiatives taken by the policy makers, which has helped in a steady recovery of the sector. As a blessing in disguise, the pandemic came to bring the much government needed attention to the wheezing logistics sector in India. In particular, the Gati Shakti National Masterplan, which completed 1 year recently, has brought about a wave of infrastructural developments improving connectivity on the total surfaced road length of more than 6 lakh kilometers.

Injecting positivity, Akash Bansal, Country Head – Logistics, Om Logistics says, “Fragmentation? On the contrary, there is a substantial consolidation happening in this domain as more and more customers are looking for a committed and organized company to support them for their logistics requirements.”

“Factors such as the rapidly expanding e-commerce industry and a burgeoning retail sales market will drive this expansion (of road freight). Companies are focusing on providing value added services along with trucking, and the companies are even shifting towards asset-light models. The evolution of the sector is the primary reason for its fragmentation, however, with gradual developments, technology interface and tax reforms, the organized players have been benefited, and it has become difficult for smaller players to stay relevant,” adds Mahendra Shah, Chairman and Managing Director, V-Trans.

“Over the previous six decades, the tilt toward the road has steadily increased. Rail was utilized for more than 80% of the modal mix in these years, while this is now only used for around 31%. Consequently, the road transportation sector leads the logistics business, accounting for roughly 65% of overall freight movement in terms of tonnage. If we split road transportation into percentages, FTL alone carries 84%, PTL 10%, and Express mode 6%,” says Ajay Khosla, Deputy General Manager, Jaipur Golden Transport Company.

Though the Indian Road freight market is dominated by FTL (Full Truck Load), PTL (Part Truck Load) is also gaining traction since a few years.

This is an abridged version of the original story which was published in the November edition of the Logistics Insider magazine. To read the complete interview, click here.

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