Truckers fear that daily fuel price hike may lead to spike in freight charges by 20%

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A truckers body on Sunday warned that transporters may be forced to increase freight charges by 20% as the daily hikes in fuel prices are making operations “unviable”.

Fuel charges are responsible for 65% of the operating cost of a truck. Apart from fuel charges, toll charges also account for about 20% of the operating cost.

“Already the demand is low and the idling of the vehicles (trucks which are off-road) is at about 55%. It has become difficult to sustain operations. The road transport sector is devastated due to back-to-back lockdowns amid COVID-19.”

~Bal Malkit Singh, Chairman core committee and former president of All India Motors Transport Congress (AIMTC)

Singh believes that the hike has compelled them to instead transfer it to the consumers, owing to lack of any other solution.

“We have no option but to pass on the increased hike to the consumers as to run the trucks in losses is not possible in the longer term”, he said.

Mr Singh believes that at present, a 20% hike in freight rates was a necessity for sustaining business.

He adds that fuel price hike creates a ripple effect on the system and it has been a tumultuous task for operators to recover running costs.

“Losses are mounting as diesel prices have rose sharply, which has already impacted the operating costs by about 20-25%,” Singh said.

The Last revision in diesel prices was carried out on July 17 when the prices were increased by 7 paise.

Oil companies revised upward diesel prices for 23 consecutive days between June 7 and 29, pushing up the prices by INR 11.79 per litre. “Transporters demand roll back of fuel price hike reasonably and rationalisation of taxes on fuel. The Central Government should reduce excise duty while the state government should reduce VAT,” he said.

Singh also asserted the need for uniform rates for diesel across the country by bringing diesel under the umbrella of GST. He also believed that the price revision should be carried out on a monthly or quarterly basis.

Fuel rates vary state to state depending on the incidence of value-added tax (VAT). Besides diesel and tolls expenses, maintenance, spares, tyres, oil and manpower account for the subsidiary cost components in truck operations.

“These costs along with driver and labour shortage are also resulting in higher cost of operations and needs to be factored in as well. Once the demand picks up, the freight rates will shoot up much higher,” Singh said.

Alluding to the fact that there has been a “consistent increase” in petrol and diesel prices in the country, Singh said  that the government should provide relief to the trucking sector so that the pressure on the transportation costs does not increase and it does not have an impact on viability of operations or prices of the commodities.

The road sector has been battling dip in demand amidst sky-rocketing fuel prices. With lockdown restrictions, vehicular lock jam and large scale exodus of migrant workers to their homes, the road transport sector has rendered exceptional services in maintaining seamless supply chain operations in the country.Earlier this month, truck drivers across the country resorted to a nationwide campaign of calling the government’s attention to their demand for COVID insurance cover, by blowing the horns of their trucks simultaneously across the country at 1 pm for one-minute, from 1st to 7th July.

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