Truck rental up marginally in October

Despite the overall slump in the economic activities, and negative sentiments, truck owners able to enhance fleet utilization in the month.

The softening of diesel price for the second consequent month, further drop-in diesel prices in October, 10%-15% jump in more cargo offerings from manufacturing units to wholesalers to liquidate the pile-up of inventories in wake of peak festival season has increased the demand for trucks in the month.

Besides, the additional demand for goods carriers for Kharif crop harvesting including paddy, cotton and oilseeds with improvement in the supply of fruits and vegetables arriving in APMCs, the truck rentals moved up by 2-3% in October 2019 on the back of last month's increase in truck freight by 3-4%.

Indian Foundation of Transport and Research and Training (IFTRT) in its monthly reports said, “Truck owners were able to increase fleet utilization in the last six-eight weeks. However, the manufacturing sector's fresh production volumes remained at lowest levels while looking into the performance of the last two and half years and thus the truck fleet replacement remained on negative territory to the extent that goods carriers sales for 5 ton-55 ton gross capacity were down by over 50% over the same period that is October last year as even the much-expected pre-buying of BS-IV vehicles failed to take off to beat the introduction of very high cost and high tech BS-VI trucks to be introduced from 1st April 2020 as truckers have fears of limited after-sale back-up from truck makers and their dealers.”

With all-round gloom on the economic front with slowdown not letting its grip on core sectors, manufacturing sector,  subdued GST collection, and exports remaining timid with the negative expectation of less than 5% GDP growth, dominated by the service sector, the truck rentals have survived the stress in the last two months in September and October 2019 due to higher shipment of piled up inventories in wake of peak festival season.

According to IFTRT, “While auto industry relates truck sales with GDP growth more often but without much of supporting data, its production volume decline and increasing production shutdowns in the current scenario remains a matter of special concern and now it is being told in the freight market that due to migration from BS-IV to BS-VI in next 5 months, the leading truck makers will curtail production and from January 2020 onwards shall be producing goods carriers based on the advance orders from customers to avoid inventory pile up.”