Truck sales dip due to lower cargo offerings

New Delhi, June 5: Despite a decline in the truck rental by 6-10 per cent in the past one month, truck sales in the country have nosedived by 16.79 per cent in May 2007 over the same period last fiscal.

The truck sales were 20,665 units in May 2006, while in May 2007 the figure was down to 17,195 units, registering a fall of 3470 units that is 16.79 per cent.

''Double digit drop in truck sales is mainly due to lesser cargo offerings from agriculture and manufacturing sectors, excessive overloading, shortage of trained drivers and an increase in the auto finance interest rates during the last six months,'' Indian Foundation of Transport Research and Training (IFTRT) report said today.

After remaining robust for 18 months, the truck rentals had dropped by 3-5 per cent in April 2007. It has posted a big hit by sharp decline of 6-10 per cent in truck rentals on trunk routes in the last four weeks due to lower cargo offerings from manufacturing sector, poultry, meat livestock and continuous weak arrival for the second consecutive month of seasonal fruits, vegetables and wheat crop form different markets.

As a result, the gross revenue realisations for truckers on trunk routes have dropped apart from decline in per trip rentals as on most of the routes the round trips have dropped by 15-20 per cent as there are lesser cargo offerings and excess truck fleet creation in the last several months, the report said.

Over the last three years, high tonnage capacity multi-axle vehicles and multi-axle tractor trailers have grown by about 75 per cent.

The most growing segment of 3-axle multi-axle truck (25.2 tonne capacity) and multi axle trailers (30-49 tonne capacity) have made a negative growth now, against continuous upward movement in sales for last 3-4 years.

This has resulted in excess capacity and truckers are not expanding their fleet and are only buying new vehicles for their limited replacement purpose, it said.

Due to the decline, trucks are making 15-20 per cent less turnaround/trips and suppressing the truck rentals on trunk routes, the report said.

However, IFTRT observed that the truck rentals are likely to come under more pressure after the truck fleet revert back to inter-state cargo, which has at present gone into intra-state haulage to move wheat procurement in various states such as Punjab, Haryana, Eastern Rajasthan, Western Uttar Pradesh and Madhya Pradesh.

The steep increase in truck auto finance rates during January-March 2007 by the banks has been one of the factors in putting restraint in sales of commercial vehicles during April 2007.

The report said that the lower cargo offerings from manufacturing sector has further complicated the trucking business and has put pressure on truckers to withdraw their indiscriminate habit of expanding their truck fleet.

During 1996-97, the truck fleet expanded by over 40 per cent despite truck finance rates going up from 8 per cent to 12 per cent during that period, while during 1999-2000, the truck sales dropped by similar margin dispite sharp reduction in interest rates from 12 per cent to 8 per cent.

The report said that the truck sales have declined mainly due to peaking of overloading in truck industry, indiscriminate expansion in truck fleet without commensurate increase in cargo offering from agriculture and manufacturing sector in the last two months.

It added that only import and export trade has maintained the expansion level to provide sustained cargo from seaports to truckers.

However, the report said the delay in the government plan to import wheat in the next couple of months may cause drop in import cargo at designated ports.

As a whole, 5-49 tonne capacity goods carriages have added almost 1.9 million tonnes cargo haulage capacity in one single year, which is 50.34 per cent growth. In case of multi-axle vehicle the capacity jump has been phenomenal to the extent of 73.95 per cent.

At present, there are 1.2 million goods vehicles (25-49 tonne capacity) operating on medium and long haul carrying national permits and moving bulk cargo akin to railways in size, dimension and weigth.

UNI