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Trucking in India? Seriously?

February 9, 2020
Rajesh Krishnan

Indian trucking industry is going through its worst phase in recent history. While it is unanimously agreed that the business is plagued by traditional challenges like infrastructure, working capital, shortage of drivers, regulatory changes and pilferage, there is also consensus that the downturn is temporary and it will scale to new heights in the long term. Isn’t it contradicting?

Ramu is a trucker who operates from a small tier town, Gummidipoondi in Tamil Nadu. He says that the freight rate for 50km short haul coal transportation has stagnated for the past 10 years. Can you believe this? Yes. More supply, heavy competition due to lack of entry barriers and the slowdown in coal segment made sure that there is no raise or revision in freight from 2010.

“In the last 10 years, fuel price has gone up by 100%, driver wages – 300%, insurance – more than 100%, spares & consumables – 75%, labour – 200%, statutory compliance – 100%, total cost of ownership – more than 100%, interest rate – 30% and there are unprecedented hassles and harassment by regulatory authorities”, he adds.

Wait, it’s not over. “We are sick and tired of all this. The payments are getting delayed and defaults have become common. There is no remedy for small fleet owners in NCLT or MSME. The interest, penalty and charges due to delay in truck statutory payments like road tax, FC, insurance, EMI and permit are very high. New regulations – AC Cabin, GPS, ABS, Speed Governor, BS VI are adding to the operating cost for which the customers are not ready to pay. Why would a customer pay 1.5x for transporting his coal by a NEW BSVI state-of-the-art 2020 model truck with better safety, better pollution measures and comfort features while he can get the same done by a 2006 model old truck for 0.75x.? (x- market rate)”, asks Ramu with a laugh.

“Though the Government has shown the intent to improve the business scenario, through GST, Fast Tag, online tax payments and licensing, the implementing agencies have defeated the very purpose of these policies by poor execution and creating bottlenecks to keep the manual mode open”, says Venky, a fleet manager at a small transportation firm in Vizag. “Under-utilisation is ruining our business. 30% of our fleet is always idle due to the lack of loads or drivers. The demand has come down drastically in the last 2 years. Fear has set-in and the question that often comes up at this level is Will it work?”, he adds.

Industry experts say road transportation is the backbone of strong economies and it cannot be ignored. It needs immediate attention from all stakeholders like government, industries, shippers, truckers and drivers. This struggling sector should be given top priority for rapid economic development as it plays a very important role in manufacturing, agriculture, import-export, infrastructure and of course, nation building. But how?

How do you think the trucking industry can revive?