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NEW DELHI : As the festival season’s demand tapers post Diwali, truck operators are expecting the road freight rates to decline by 5-10 per cent compared to the first fortnight of October.
Analysts and truck operators are also expecting the demand for electronics and consumer durables to fall after Diwali. Besides, prolonged rains in the South and West India have already impacted the supply of fruits, vegetables and other perishable items.
A saving grace, many expect would be with the supply of agricultural commodities next month and government spending on infrastructure, propelling demand for steel, cement, etc.
A top executive with a leading logistics firm said that there is a “talk” about increase in retail prices of diesel in-line with the global scenario. Inflation is an issue. Demand for electronics and durables is also slowing. This may soften the rates by 5-6 per cent.
Freight rates
CRISIL’s Market Intelligence and Analytics Director, (Consulting) Hemal Thakkar said that freight rates increased by 3-4 per cent in the first 15-20 days of October but it should come down to a certain extent once the festival demand settles down. Going forward, the rates will largely mirror the momentum in fuel prices as freight operators pass on the price hikes to the customers.
Following a strong festival season across the country, inflation seems to be catching up and may start showing some signs of it by the end of this quarter (Q3 FY23) and beginning of next, he added.
All India Motor Transport Congress President, KS Atwal, too emphasised that post-Diwali freight rates will soften. Transport of perishable items have fallen due to poor weather conditions among other factors. Road freight rates for movement of cars are already down by roughly 15 per cent as manufacturers, such as Maruti, are increasingly using trains for transportation. “We are expecting the Diesel prices to rise. Transport of perishables is also likely to fall by 5-7 per cent. So overall, we expect the freight rates to decline around 10 per cent,” he explained.
This year, pre-Diwali activities are down compared to the pre-Covid times and business was down by around 10 per cent, Atwal rued.
Clearer picture in November
Analysts pointed out that a clear picture on rates will emerge by mid-November as economic and farm activity picks up further.
“We believe that the government’s current fiscal position is healthy and if they pump money in the infrastructure space as planned, then demand buoyancy should continue till the end of the quarter. Also, basis seasonality, agri dispatches and construction material movement should also help in this quarter,” CRISIL’s Thakkar said.
Meanwhile, Atwal said that generally there is a brief lull in trucking activity due to the Diwali holidays, but it usually picks up in 10-15 days as fruits and vegetables are transported from Maharashtra. However this time, due to rains, that is likely to be impacted. Movement of potato seeds from Punjab also got hit as sowing was affected by rains. He, however, is confident that road freight can revive in a month depending on the weather conditions and economic outlook. In the next 15-20 days, truckers will be lifting paddy, which will help revive the business a bit.
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