Drop in cargo availability coupled with delays in return load from the manufacturing sector has resulted in truck rentals declining by 1.5%.
This is despite a hike of INR 3.52 a litre in diesel prices in June. July too may not witness any visible buoyancy or major fluctuation in truck rentals on trunk routes.
Operators could not pass on the burden owing to a drop in cargo volumes, said Indian Foundation of Transport Research and Training (IFTRT), the apex body tracking the truck industry.
During June 2016, there was an all-round drop in cargo availability led by 15% lower arrivals of fruits and vegetables in APMCs and about four-five days delay in availability of returned load from manufacturing sector; even the cargo availability from cement, fertilizer and timber was just steady.
Ever since diesel price was deregulated in October 2014 with a rider for OMCs to have fortnightly price revisions in line with international crude oil price and rupee-dollar parity, truck rentals for the first time in the last 21 months broke away from direct relationship in freight rate movement in relation to revision in diesel price.
During June 2016, truck rentals could not only absorb the substantial diesel price hike of INR 3.52 a litre but also dropped by 1.5% on most trunk routes, while the open market was expecting a 3.25% increase.
According to the foundation, the sudden reversal in rental movement delinked from diesel price was mainly due to a fall of over 15% in the arrival of fruits and vegetables and other agri products like pulses into the AMPCs and wholesale grain markets.
Source : http://goo.gl/X6UJD1