No change in truck freight due to diesel price hike: IFTRT

The transportation industry has not been able to pass on the 50-60 paise per litre increase in diesel fuel price post decontrol. As a result truck freight charges have remained unchanged in a decidedly dull economic scenario and a glut in the commercial vehicles industry which is facing an over supply of trucks says Indian Foundation of Transport Research and Training (IFTRT).

"In the light of the present business model of truckers such small increases cannot be practically transferred onto to consigners," said S P Singh, senior fellow, IFTRT. A truck operator normally is able to increase truck rentals if the diesel price hike is more than Rs 1 per litre, he added.

Transport bodies like the IFTRT have been suggesting pre-scheduled quarterly increases to the tune of Rs 1.50 - Rs 2 per litre. Anything less than this, they argue, becomes a pinch for the truckers because it cannot be passed on to the clients. "A Rs 1 per litre diesel price hike on the Delhi-Mumbai-Delhi round trip will entail Rs 700 increase in the truck freight ie 1.5% on the present round trip charges of Rs 54,000," said Singh. "Thus, the weighted impact of diesel price hike through truck rental increase on bulk cargo like cement, marble, timber, food grains etc should be 0.5% - 0.6% on total price of these products, on fresh fruits & vegetables by 1% - 1.5% and on the general merchandise like FMCG, white goods, pharma products, electronic goods etc. by 1.5% - 2% only." Besides, in case of 30% of the goods moved by transporters, the variation clause in the long term transport contracts with corporates also covers a diesel price hike impact.

With the mounting under recoveries worth Rs 96,000 crore standing with oil marketing companies (OMC), the need to increase diesel price happens to be Rs 10 per litre. The government has announced the decision to allow OMCs raise diesel prices by decontrolling the fuel.



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