Facebook Pixel Code

Festival season drives up truck rentals by 4%

October has expectedly seen buoyancy in truck rentals and increased fleet utilisation by 10-15% due to festival season and consumer spending.

October has expectedly seen buoyancy in truck rentals and increased fleet utilisation by 10-15% due to festival season and consumer spending. Diversion of truck fleet to intra-state operations to meet the transport requirement of paddy procurement in several states also gave a fillip to the rentals. Consequently, the truck rentals witnessed a 3-4% surge on the trunk routes during October 2012 over the last month, said broking and research firm Prabhudas Lilladher.

In September 2012, truck rentals went up by 12-15% due to a diesel price hike of R5 per litre. However, within a week, the freight market presented a huge resistance due to continued low cargo offerings.

Truck rentals during April-September 2012 period dropped 1-3.8% y-o-y on most of the trunk routes despite the diesel price hike. Truck rentals peaked in March 2012 due to incessant increase (30-35%) in the previous 10 quarters beginning October 2009, on the back of steep increase in fixed and variable operating cost (weighted impact of around 22-24%) in the same period.

However, except fuel cost, rest of the fixed and operating cost for truckers relatively remained soft in the last six months. Hence, the truck rentals dropped in the first half of 2012 fiscal due to overheating of truck freight charges and over supply of truck fleet in the market accentuated by lower cargo offerings from manufacturing, fruit and vegetable and import-export trade, said Surjit Arora, an analyst with Prabhudas Lilladher.

Though truck rentals and dispatches went up during October and shall remain buoyant even during November due to peak festival season, the truck business has been lower by 10-12% over the same period last year and it would be too early to relate the present upswing to the larger economic recovery.

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 13-11-2012 at 02:51 IST
Market Data
Market Data
Today’s Most Popular Stories ×