Indian Road Freight Market Intelligence

Are you looking for answers on Indian Road Freight category?

Are you looking for answers on Indian Road Freight category?

  • What are the key trends in Indian Road Freight category?
  • Am I paying the right price?
  • Am I working with the right supplier?
  • What are the major challenges and risks in Indian Road Freight industry?
  • How is Indian Road Freight industry performing?

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Report Coverage

 

  • Contract Duration Analysis: Scenario Analysis
  • Latest Development and Trends: Indian Trucking Market
  • Cost Structure of Road Freight Transportation: India
  • Analysis of Cost Elements: Road Freight Market in India

Table of contents

  1. Executive Summary
  1. Indian Trucking Industry: Market Analysis
  1. Seasonality of Truck Demand
  1. Truck Procurement Structure
  1. Contract Duration Analysis
  1. Latest Development and Trends: Indian Trucking Market
  1. Cost Structure of Road Freight Transportation: India
  1. Analysis of Cost Elements: Road Freight Market in India
  1. Benchmark Rates
  1. Road Freight Cost Index
  1. Trending of Major Cost Elements
  1. Truckload Rates Benchmark Framework: MT
  1. Seasonality of Truck Demand: Major Industrial Locations

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Trucking Market Overview

After economic reforms (GST) and trucking regulations (E-way bill), trucking market loomed poor performance in the initial stages (Jan-Feb 2018), but since Mar-2018, transportation market experienced strong demand from retail shipments, industrial products, and agriculture commodities. During H2 2018, estimated demand growth of 7-8 percent, coupled with higher fuel prices, is more likely to increase freight rates by 6-10 percent compared to the previous year. Shippers are more likely to be challenged with truck placement issues during the peak season (Sep-Dec) with higher volume of shipments accommodated by retail, consumer durables, fresh cargo, and food grains

india frieght market

Strong Demand Recovery and Higher Freight Rates

  • In H1 2018, road freight transportation volume has experienced growth of 4–6 percent annually, growth in demand is driven by higher cargo volume from construction, mining, and agro commodities
  • Apart from primary industrial sectors, secondary transportation volume is driven by higher retail volume and FMCG shipments with 10-12 percent annual growth during first half of the year
  • On the supply side, the trucking market has experienced significant growth, in terms of new trucks addition to the market, with increased truck sales of more than 20 percent annually
  • Implementation of GST, emission standard, and cost efficient trucks has been major drivers behind the addition of new trucks with higher payload
  • Transporters preferred to add trucks with payload of more than 30 MT, while the LCV and MCV (payload less than 15MT) addition has been relatively less

Trucking Best Practices

The average contract duration in India is 1–2 years, as the market is very competitive, in terms of pricing. Also, DPO is approx. 30 to 45 days for larger companies, as they maintain a healthy working capital. A competitive bidding process is used to award the contracts where the bidder with the lowest freight charge wins the contract and the service providers generally tend to absorb the increased cost of fuel rather than passing it on to customers immediately to remain competitive.

  • Long-term contracts necessarily do not protect the operators from the risk of a fuel price hike. As the contracts are large (for e.g., the consignments of more than 1,000 tons), the additional fuel cost, due to fuel price hikes, turns out to be relatively smaller compared to the total fuel cost per trip
  • Service providers generally tend to absorb the increased cost of fuel rather than passing it on to customers immediately to remain competitive

 

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