Goods transport business – Victim of economic slowdown

The economic slowdown has taken off the road nearly a quarter of the total trucks in the country. In fact, the number is as high as 80 per cent in the mining belts of Karnataka, Orissa and Chhattisgarh.
A third of the 350,000 trucks plying on long routes face the threat of seizure by their financiers over payment of arrears. Over 7,000 such trucks have already been seized.
Truckers, in short, now face their worst ever crisis. The magnitude is not small. All told, there are 275,000 goods transport agencies or truck operators in the country, who together own 4.43 million trucks. The crisis has put at stake the livelihood of almost 25 million workers who are directly or indirectly employed in the goods transportation industry.

Truck rentals:
July ’08 Dec ‘08
Delhi-Mumbai-Delhi 41,000 35,500
Delhi-Kolkata-Delhi 43,000 36,000
Delhi-Kandla-Delhi 25,600 21,248
Delhi-Kanpur-Delhi 24,000 18,000
Worst hit are the truckers who worked for miners. With iron ore exports taking a major hit due to lower demand from China, 80-100 per cent of trucks in some of the mining areas of Karnataka, Orissa and Chhattisgarh are out of work, said All-India Confederation of Goods Vehicle Owners Association Vice-president.
A growing number of truck operators are defaulting on the repayment of loans and therefore face the threat of seizure by the financiers. A large number of trucks have been seized in Karnataka over non-payment of loans in the last few months according to a senior executive at Shriram Transport Finance Company Ltd, one of the largest commercial vehicle finance companies in the country.
The drop in the availability of cargo for transportation has also resulted in a severe drop in the number of trips undertaken by a truck. For instance, a truck used to operate 18 round trips on the Delhi-Kandla-Delhi route till the last quarter (July-September 2008). This has come down to 14 trips in the current quarter. Similarly, on the Delhi-Mumbai-Delhi route, the number of round trips undertaken by a truck has come down to 9 from 12. As a result, truck rentals have dropped almost 15 per cent over the last quarter.
The automobile sector, which constitutes almost 19 per cent of the total manufacturing sector in the country, has witnessed a decline in October 2008. Similarly, other segments like textiles and construction are seeing a major slowdown. All these have resulted in 25 per cent of the trucks being under utilized in the country said a senior fellow at the Indian Foundation of Transport Research and Training.
Even those manufacturing companies which still use the services of truckers have extended the credit period. This has put further pressure on the small truck operators as well as the major logistical companies. A Safexpress official said: “The liquidity crisis has resulted in the cash cycle becoming a little longer. Earlier, if it was 90 days, it has now increased to as high as 120 days or in some cases even 150 days.”
Meanwhile, truck operators led by the All-India Motor Transport Congress have threatened to go on a nationwide indefinite strike from January 5, unless their demands are met by the government. They are demanding a Rs 10 per litre reduction in the price of diesel, a 35 per cent reduction in tyre prices, abolition of the service tax on goods transport agencies, and further amendments in the Central Motor Vehicles Act, 1988.
Recently there was Truckers’ strike as they wanted some sops from the Government of India. If one visualizes neutrally considering the hours lost at octroi check post, inter-state check posts and the speed money that has to be shelled out at these posts plus Toll nakas the Truckers’ case seem to be justified. However the Truckers must keep the essential commodities particularly Food products out of the purview of strikes so that inflation and black marketing does not be rampant.