Rising freight rates turn out to be the next biggest nightmare for shippers

increasing freight rates

During the lockdown period, the truckers were working on no profit bases and returning without cargo load. In order to make up for the loss, the truck freight rates on trunk routes have risen by 20%-35%.

The hike in rates has impacted agri commodities, FMCG and other consumables transportation with smaller companies and regional players being hit the hardest.

According to Kultaran Singh Atwal, President, All India Motor Transport Corporation (AIMTC), “A truck coming from Pune to Delhi, carrying grapes, is now costing Rs 90,000 against the Rs 70,000 earlier as we are not getting any return cargo. Also, if a vehicle breaks down, the repair is not easily available. Sometimes it takes days to get them fixed.” 

“Trunk route truck freight is up between 20%-35% as only one-third of the 5.2 million goods carriers are now on roads. Since there isn’t enough cargo the trucks have to return empty forcing transporters to sharply increase one-way freight. Sample this: The Nashik-Delhi mango route has seen one way freight rise to Rs 75000 from Rs 45000”,

~SP Singh, Coordinator, Indian Foundation of Transport Research & Training (IFTRT)

At a time when challenges in the distribution network and production are still standing, this is an added cost for the companies.

“The non-availability of truck drivers has pushed up freight rates. We are working with our business partners and transporters to manage the same,” said Shahrukh Khan, executive director -operations, Dabur India.

Yugal Sikri, MD, RPG Lifescience said, “Freight charges have gone up across all modes of transport. Ship and air freight charges have nearly doubled. Courier charges have more than doubled. Further, there are frequent changes in the freight charges depending upon drivers and space availability, despite booking in advance. Cargo loading /unloading is also facing challenges due to shortage of labour,”

The fresh produce industry which is one of the worst hit industry after the outbreak of the novel virus is looking at changing its sourcing plans told Shan Kadavil, CEO, FreshToHome, an online platform that sells meat and fresh produce which has seen a 10% increase in freight charges and a doubling in air charges.

He said, “The reason for a jump in freight charges is low availability of trucks and drivers. The vendors also have to factor in the increased cost of providing sanitation and protective equipment for their drivers. To deal with this, we had to change our sourcing points and reduce our dependence on air.”

For Nishant Chandran, founder of meat startup, Tender Cuts, freight rates have been volatile ever since the lockdown happened. “The current increase is at 15% for some routes. However, we have had to pay upto 3x for transporting perishables from southern Tamil Nadu to Nellore.”

Transporters for their part say that big e-commerce and manufacturers have annual contracts which cannot be tweaked. So, transporters have to make up their losses somewhere.

“There was a surge in demand when businesses opened in May to clear the backlog of the old order. But after May 15, demand is down drastically. At some places, there are no trucks. In others, there are no drivers. And where they are both available, there is no cargo. Big e-commerce companies have long term contracts. There the transporter has to bear the freight loss. Only the agri product transport is seeing a temporary increase. Currently, only 30%-35% of the trucks are running – around 20% is for medical and essential supplies and just 15% is for the market,” said Rajinder Singh, Chennai-based transporter and general secretary of All India Confederation of Goods Vehicles Owners Association.

Source: TOI

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