The recent spike in fuel prices may require about 50,000 truck owners (most truck owners) to park their vehicles. BLR Logistics (I) Ltd. Ashok Goyal, managing director, told Business Standard, “There is already an excess supply of vehicles on the roads. Transporters may look to reduce the size of their fleet amid the recent rise in diesel prices. This may cause small truck owners to suffer. ‘
The company has around 500 vehicles, all types of small and big, and operates across the country. Around eight lakh commercial vehicles are plying on the roads across the country.
Owners of one or two trucks usually give the transporter their vehicles to run on contract as they have better network. Goyal said, “About 50 per cent of our total cost is spent on fuel. In such a situation, the cost has increased considerably due to expensive fuel. We have a supply of fuel but in the current situation we are not able to pass on 80 per cent of the increase to the customers. Because of this, our margins are almost exhausted and further difficulties may increase.
However some small truck operators are also taking advantage of this increase.
Sachin JKS Haritash, founder and CEO of truck aggregator Mavin, which caters to customers such as Hindustan Unilever, Amazon, Flipkart, said, “Small transporters adopting spot prices are increasing freight rates to fuel prices.” More than 8,000 trunks are registered on this platform and 80% of them are owned by owners of 20 or less trucks.
Haritash said, “These operators have increased the freight far more than the actual increase in fuel prices.” He said, “If the fuel prices increase by 4% this month, then the prices of small transporters will increase by 6%. Such transporters are taking advantage of increasing demand and increasing fuel prices.
Meanwhile, the temperature controller truck transportation industry is preparing to pass on the increased cost of fuel prices to customers.
Cool-X cold chain managing director Rahul Aggarwal said, ‘Demand in the temperature controller industry is more than supply. In such a situation, increasing the freight will not affect the business. We are in talks with our customers and freight may increase from March.
Industry experts say that so far in FY 2021, fuel prices have risen by about 30% per liter. Officials of transport companies say the hike in fuel prices is in sharp contrast to the government’s goal of reducing transportation costs. Aditya Wazirani, chief executive of Robbins Global Logistics Solutions (RGL), said, “Operating costs are already high, so increasing fuel prices has raised concerns for logistics and transportation companies and shrinking margins.” The government has set a target of reducing transport costs from 13-15 to 8 per cent, but the current situation is the opposite. If the price of fuel keeps increasing like this, then the cost of supply of goods will also increase, which will also have an impact on inflation. SP Singh, a senior official at the Indian Foundation of Transport Research and Training, New Delhi, said that the freight in February increased by 13 to 14 per cent compared to January. He said, “Prices generally go up in the last quarter as all sector manufacturers are forced to vacate their inventory before the end of the financial year.”
“The increase in fuel prices has affected the logistics sector the most,” said RGL’s Wazirani.