Transportation India Market Intelligence

*This report was last updated in Q4 2018. Please click on request customization if you are looking for an updated version of this report

Report Coverage

  • Major Cost Drivers
  • Regulations impacting Road Freight
  • Truck Registrations (2019)
  • Key trends and challenges in Road Freight Transportation

Table of contents

  1. Diesel Cost Analysis - India
  1. Diesel Price Analysis - India
  1. State-Wise VAT on Diesel Fuel
  1. Truck Demand versus Supply Outlook
  1. Cost Structure Analysis
  1. Major Cost Drivers - Inflation
  1. Major Cost Drivers - Wages
  1. Other Cost Drivers – Toll Charges
  1. Road freight index and impact of fuel cost on the overall freight rate
  1. New Regulations Impacting Road Freight – BS VI
  1. New Regulations impacting Road Freight-Fastag
  1. Truck Registrations (2019)-By State and By Capacity
  1. Market Outlook for FY 2020-2021

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Regional Market Outlook on Transportation India 

Trucking industry is mostly driven by agriculture goods and core sector shipments, such as manufacturing, construction, consumer goods, electronics and automotive

Road freight carries about 65 percent of the overall freight in India and contributes more than 6 percent to the country's GDP in terms of logistics cost

State of Trucking Market in India

  • The trucking market in India is highly fragmented, with large number of operators of different size, ranging from owner–operators to large trucking companies, with truck fleet of more than 100 trucks
  • Only 10 percent of the service providers own more than 20 trucks while companies with less than 5 trucks contribute 75 percent, highlighting the fragmented market

Truck Characteristics in India

  • Generally, 40% of the trucks operating in India are less than 6-year old, and about 34% of the trucks are more than 10-year old
  • The average age of the trucks is set to go down in the coming years with the government planning to ban trucks that age more than 15 years

Transition to Fuel- efficient Trucks

  • Fuel-efficient trucks in major trunk routes (NH 7, 8, 9, 4) are expected to increase by about 30–40% in the next 2–3 years, which will reduce the fuel cost per Km in these routes
  • Smoke-spewing trucks mainly used for long haul are in for a total makeover with government clearing norms for LNG refuelling stations in order to reduce pollution

Supply Demand Scenario – India

Supply has continuously outpaced the demand since 2019 but, starting September 2019, demand has increased by 2 percent for the first time in 2019, and freight rates are expected increase by 3-6 percent on major truck routes until December 2020.

Demand is expected to outpace supply from October as cargo flow from the agro and retail sectors is expected to improve, higher demand is expected due to harvest and climatic disruptions between October and December which will impact freight costs.

Available Supply in the market

  • The market has been supply-driven due to limited cargo movement; it is reported that 60 percent of one crore trucks in the country have been idle due to non-availability of cargo
  • The new government regulation in July 2018 on increase in weight carrying capacity of heavy vehicles in India has increased the official maximum load-carrying capacity of heavy vehicles by 20-25 percent. This has clearly impacted the truck utilization

Industries Driving Demand and Seasonality

  • Growth is driven by input from agro commodities, e-commerce, food and beverage, textile, apparels and other SME industries
  • E-commerce, in specific, is expected to contribute more to the demand in the next couple of months as festive offers by e-commerce giants will increase which will influence higher online purchases for the next couple of months

Diesel Price Analysis - India

Crude Oil Market Overview

  • Indian crude basket price in 2019 was $63.87/bbl which decreased by 8.7 percent Y-o-Y. The Indian crude basket price has 99 percent correlation with the Brent crude prices and any fluctuation in the global Brent crude oil price will have a direct impact over the Indian crude basket price
  • Global economic slowdown, the US–China trade tensions, reduced oil demand and surplus oil production during Q1 to Q2 2019 due to the US sanctions on Iran caused the prices to decrease crude price. However after Q3 2019, OPEC decided for oil production cuts to maintain stable oil price. Though the oil price spiked between August-September 2019 due to the attack on the oil fields in Saudi Arabia, the supply was restored back in one month
  • For 2020, crude prices are expected to be down by 5-6 percent due to the outburst of Corona virus in China which has hit the major market of demand, and oil price is expected to be down for a short period. Global economic slowdown coupled with US-Iran tension are the other reasons backing crude oil price decrease
  • Due to reduced demand OPEC, Russia and other oil producing nations are expected to further increase production cuts to maintain the stability in crude prices


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