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Diesel price cut: IFTRT expects 2.5%-3% decrease in truck rentals |
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CHENNAI: The latest diesel price cut is expected to bring down truck rentals by 2.5%-3% on trunk routes, says a report by the Indian Foundation for Transport Research and Training (IFTRT).
With international crude oil price falling to 2008 levels as Brent crude touched $46 / bbl last week, public sector oil marketing companies (OMCs) cut diesel price by Rs 2.25 per litre on January 16, 2015 and simultaneously passed on Rs 2 per litre to the central government by way of increase in excise duty.
Taking a cue from this, almost eight leading states too have increased sales tax per VAT on diesel in the past four weeks ranging from Re 1 per litre to Rs 1.50 per litre to increase their revenues said a latest IFTRT report.
Diesel price was revised upward by Rs 3.37 per litre in 2011, Rs 5 per litre in 2012 and Rs 0.50 per litre every month from January 2013 to September 2014 which works out to Rs 10.60 per litre.
"Thus, the consumer paid Rs 18.95 per litre during this period to meet the rising international crude price and 'under recoveries' of OMCs and this also led to increase pro-rata revenue of state governments in the form of increased sales tax or VAT," said SP Singh, senior fellow, IFTRT.
"On the other hand, in the last 8-10 quarters, truck rentals dropped on account of poor cargo availability from the manufacturing sector, import - export trade and infrastructure projects. Given the oil pricing scenario, truck freight associations, unions and agents too are displaying resistance in cutting freight charges. Truck freight in the case of contractual transport agreements have been reflecting the fall in diesel price since October 2014," he said.
The latest diesel price cut of Rs 2.25 per litre has culminated in the total price cut of Rs 10.71 per litre since October 2014, said the report.
"The current price cut is expected to bring down truck rentals by 2.5%-3% on trunk routes particularly when cargo offering from agri-products like fruit and vegetable remains flat and despatches from factories, particularly SMEs, remain tepid and the cargo movement from import - export trade is showing very slow progress leading to truckers not able to utilize their fleet optimally," he said.
Truck rentals on trunk routes may follow suit as Delhi-Mumbai-Delhi full truck load (FTL) for 16 tonner truck should be Rs 59,000 as against the rental prevailing before the last diesel price cut of Rs 60,500, Delhi-Hyderabad-Delhi down to Rs 83,500 from 85,300, Delhi-Kolkata-Delhi to Rs 59,800 from 61,300, Delhi-Ranchi-Delhi to Rs 61,500 from 62,200 and Delhi-Raipur-Delhi to Rs 58,000 from Rs 59,400.
However, transport intermediaries and retail part load parcel booking firms are somewhat resisting to cut retail freight charges in most of the trading centres as these goods booking firms are dominated by powerful goods transport association and agents who in turn control the small truck operators attached to them for daily load offerings, said the report.
"At present as per yellow books, there are almost 2.5 lakh goods booking firms, logistic companies and agencies, which control 85% of the national truck fleet in the country. The representative national associations of these transport firms are arguing that while diesel price has come down, the price of tyre, lubricants and vehicles are going up and hence they have reason not to reduce retail freight charges to consignors," said Singh.
Source : timesofindia.indiatimes.com
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