Truck rentals may rise 3-4%

Truck rentals are likely to go up by three-four per cent following the Rs 2-a-litre hike in diesel prices.

Transport companies may also raise freight charges for consignments by 10-12 per cent.

S P Singh, coordinator, Indian Foundation of Transport Research and Training, said the increase in the price of diesal might lead to a three-four per cent rise in truck rentals on the back of a buoyant economy.

Truck rentals rose 21-23 per cent during November-May due to 16.5 per cent growth in the manufacturing sector and almost 25 per cent increase in imports and exports.

According to a compilation by IFTRT, truck rentals on medium and long haulage remained firm as the truck freight market and the manufacturing industry were expecting a Rs 3.20 per litre hike in diesel.

"The manufacturing sector alone is growing over 16.5 per cent. Apart from manufacturing, cargo offerings came from the import-export trade, agricultural commodities, both dry and wet products, and infrastructure," he said.

When the economy started picking up in November 2009, truck rentals shot up due to a mismatch in demand and supply. Since then, the rentals have been rising consistently.

The rentals also flared up due to the 10-12 per cent hike in tyre prices during January-June.

"Diesel and tyres account for 90 per cent of the operating cost of a truck. Truck rentals have outpaced the increase in operating cost during the period.

In June, effectively, truck rentals are overpriced by 8-10 per cent because of the demand for trucks outpacing the supply, following the increase in inter-state movement," he said.

Since new national permits were not issued in May, it accentuated the shortage of trucks on trunk routes, Singh said.