COVID-19 Impact: Road freight rates rise as most trucks still stranded

Even as the government eases restrictions on industrial activity in a graded manner under Lockdown 4.0, migrant workers’ return to their homes has exacerbated the trouble for the transport industry.

Trucks are stranded at warehouses, and the level of idle trucks or the vehicles currently not in use is now close to 70 percent, sources said.

The scarcity has also led to freight rates shooting up in the range of 15 percent-20 percent currently, which are expected to increase to 25 percent-50 percent in the coming weeks, if the shortage is not addressed soon.

Utilisation levels for commercial vehicles carrying goods peaked at 40 percent-45 percent until a week ago and has now dipped to 30 percent deployment, with the likelihood of a further decline, according to Abhishek Gupta, Joint Secretary, All India Transporters’ Welfare Association (AITWA).

A concerning trend is the movement of cargo at the Jawaharlal Nehru Port Trust (JNPT) outside Mumbai, which is the largest port container in India, is seeing a drop to only 15 percent-20 percent of normal levels, which sounds like an alarm for the country’s EXIM traders, and may also affect the supply of essential items in the times to come.

Currently there are trucks halted at big warehouses across the country and the lack of labour to facilitate loading and unloading of goods is creating a shortage, according to Anjani Mandal, CEO & Founder, Fortigo Network Logistics.

Even in the case of automated loading and unloading systems for palletized cargo, labour is essential to perform functions such as strapping down the pallets, Mandal added.

Transport companies’ associations, including All India Motor Transport Congress, warn that new demand for freight will remain low going forward, as industrial output is anticipated to be muted and warehouses too will continue to work below capacity.

The Ministry of Home Affair’s guidelines have capped the maximum staff/workers permitted at a factory or establishment at 33 percent under the ongoing nationwide lockdown.

In view of low demand and high operating costs, transporters are mulling options such as surrendering their vehicles to the Regional Transport Offices (RTOs) to relieve them of taxes for the period they are not being used.

The Central government had extended the renewal deadline for statutory documents such as national permits and motor vehicle insurance, earlier due in March, to the month of June. However, owing to the extension of the lockdown, these costs will catch up transporters soon.

The Reserve Bank Of India’s moratorium scheme for EMIs taken from banks & NBFCs for a period of three months will also expire by the end of May. According to industry estimates, nearly 85 percent-90 percent of drivers-owners had opted for the moratorium on EMIs on their vehicle loans. As the payments become due in June, many small fleet operators will find it difficult to muster up the cash to fulfill the installments.

However, while overall deployment of trucks is likely to see a dip going forward, even as freight rates skyrocket, the FMCG and foods space will see a deployment of close to 60 percent, according to Fortigo.