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Diesel Prices Reduce, Freight Rates Don’t

Published On Aug 24, 2016By Lisa Pradhan

Its obvious to expect that a decrease in diesel prices will bring positive news for businesses. However, despite two successive reductions in diesel rates this month, freight charges remain the same. The reason behind this can be the already reduced freight rates during the first quarter of this fiscal year which makes further reduction in prices infeasible.

Diesel prices were slashed by INR 2.01 per litre on August 1 and INR 2 per litre on August 16 and truckers are currently expressing their helplessness over the unswerving freight rates.

Freight charges were already reduced during the April-July period by 20 to 22 percent (as compared to the same period last year) owing to low demand. This low demand has been aggravated due to a sharp fall in goods transportation, especially perishable commodities such as fruits and vegetables.

However, truckers remain optimistic and are hoping that increased consumer spending due to a salary hike after the 7th pay commission is implemented, good monsoon that will yield a good post-monsoon harvest in October and peak festival season will increase demand for truck fleets and hence, will improve the condition of the trucking industry.

Bhim Wadhwa, President, All India Motor Transport Congress (that represents 75 lakh truckers in the country), said, “Overall there is a slowdown in the economy and it has affected the truck industry also. The demand for trucks stands at 40% currently, with 60% of the fleet being unutilised. With extremely weak demand for transportation, the freight rate has already gone down by 20-22% in the past one year.”

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