Follow real-time updates on Union Budget 2023Catch exclusive videos on Union Budget 2023 from CNBC-TV18
CNBC-TV18 spoke to a number of road transporters and the dip stick survey indicates that there is a capacity-demand mismatch in logistics sector. While the capacity has increased by 7-8 percent, demand has increased only by 5 percent in last couple of months. The trucking segment has recorded a flat growth owing to a number of factors and the worst impacted are the smaller players.
“Slowdown” is a word that is repeated ad nauseam but let’s face it, it is a reality. So far we have been talking about the slowdown in automobiles, real estate and infrastructure. One sector that has been surreptitiously facing the brunt of slowdown is the logistics sector especially small players in the road transportation.
CNBC-TV18 spoke to a number of road transporters and the dip stick survey indicates that there is a capacity-demand mismatch. While the capacity has increased by 7-8 percent, demand has increased only by 5 percent in last couple of months. The trucking segment has recorded a flat growth owing to a number of factors and the worst impacted are the smaller players.
Transition to BS IV
Axle Load Norms
Axle load norms were not only negative for the automobile industry but it also impacted the logistics players for two reasons: first their competitiveness reduced as efficiency gains from being able to carry more rated load per trip had to be passed on through lower spot rates. Also, higher load required more consumption of fuel and also higher maintenance costs.
Other Costs
Post the implication of GST, the sector did see higher turnaround of trucks and lesser travel time for them due to lesser checks and e-way bills. However, this did reduce the life cycle of those trucks and led to higher depreciation and higher maintenance costs. Not only that, there has been increase in road taxes across states, thereby crunching margins further for these players.
Lower Freight Rates
Amidst all the hullabaloo regarding higher costs, the bigger disappointment for these guys has been the fact that freight has not really gone up. In fact, for truckers, “core rentals” (i.e. nominal freight rates less fuel costs) has recently fallen to lowest level since demonetisation. And net cash flow for past all expenses has turned negative for truckers since March 2019, hurting small truckers more than large fleets. While nominal rates have fallen, core rentals have fallen even more sharply.

However, discussions with organised players suggested that they are not much impacted by the above issues. Organised large fleets are relatively better off (low single-digit tonnage growth) due to higher utilization and are gaining at the cost of small truckers.
First Published: Sept 16, 2019 5:48 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!