Daily fuel price hike may push up freight charges by 20%, say truckers
Demanding monthly or quarterly revision in diesel prices, which saw an increase for 23 days on the trot last month, a truckers body on Sunday warned that transporters may be forced to increase freight charges by 20 per cent as the daily hikes in fuel prices are making operations "unviable".
Fuel charges account for as much as 65 per cent of the operating cost of a truck. Toll charges are another major component, which is about 20 per cent of the operating cost. "Already the demand is low and the idling of the vehicles (trucks which are off-road) is at about 55 per cent. It has become difficult to sustain operations.
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The road transport sector is devastated due to back-to-back lockdowns amid Covid-19," Bal Malkit Singh, chairman core committee and former president of All India Motors Transport Congress (AIMTC) said in a statement. "Course correction" in freight (charges) is definitely required sooner or later for the survival of the truck operators, he said, adding,"we have no option but to pass on the increased hike to the consumers as to run the trucks in losses is not possible in the longer term."
"At present a 20 per cent hike in freight rates is a must for sustaining business," he said. He said that hike in fuel prices always has a cascading effect right from top to bottom and in the wake of a daily price hike, it is becoming increasingly difficult for operators to recover running costs. "Losses are mounting as diesel prices have rose sharply, which has already impacted the operating costs by about 20-25 per cent," Singh said.
The Last revision in diesel prices was carried out on July 17 when the prices were increased by 7 piase. Oil companies revised upward diesel prices for 23 consecutive days between June 7 and 29, pushing up the prices by ₹11.79 per litre. "Transporters demand roll back of fuel price hike reasonably and rationalisation of taxes on fuel.
The Central Government should reduce excise duty while the state government should reduce VAT," he said. Singh also demanded uniform rates for diesel across the country by bringing diesel under the GST and also said that the price revision should be carried out on a monthly or quarterly basis. At present, rates differ from state to state depending on the incidence of value-added tax (VAT).
Besides diesel and tolls expenses, maintenance, spares, tyres, oil and manpower are the other cost components in truck operations. "These costs along with driver and labour shortage are also resulting in higher cost of operations and needs to be factored in as well. Once the demand picks up, the freight rates will shoot up much higher," Singh said.
Stating that there has been a "consistent increase" in petrol and diesel prices in the country, he said "the government must provide relief to the trucking sector so that the pressure on the transportation costs is contained and it does not have an impact on viability of operations or prices of the commodities."