Table of Contents
A Step Towards Stabilizing India’s Trucking Industry
The All India Motor Transport Congress (AIMTC) has proposed to the central government to introduce minimum freight rates for all types of commercial vehicles. This move is intended to address the problems in the transportation industry, primarily caused by tough competition and price-cutting wars that have led to unsustainable earnings for truckers and transporters.
The Problem: Unhealthy Competition
Currently, the absence of standardized freight rates forces transporters to undercut each other to secure contracts. This often results in offering services at rates far below sustainable levels. For instance, a 32 feet multi axle truck trip from Chennai to Bangalore that should ideally be priced at ₹28,000 might be undercut to ₹24,000, putting tremendous financial pressure on transporters and truck owners.
Without minimum freight rates, this cycle continues, leading to losses or thin profit margins, forcing many transporters to reduce vehicle maintenance and driver pay.
AIMTC’s Proposal: Fair Pricing for All
To break this cycle, AIMTC suggests that the government set minimum freight rates similar to the regulated fare systems in place for auto rickshaws and buses. This would establish a fair and competitive market, ensuring all players can operate profitably while offering quality services. A standardized rate would also discourage exploitative pricing practices, leading to a healthier, more stable logistics industry.
Comparison of Fair vs. Unfair Pricing
Let’s consider a round trip from Chennai to Bangalore using a 32-feet multi-axle truck.
| Cost Item | Fair Price (₹56,000) | Unfair Price (₹48,000) |
| Diesel Cost (178L * ₹93){Truck Mileage = 4.5 KM/LDiesel required = 800 /4.5= 178LCost Per Litre = ₹94} | ₹16,600 | ₹16,600 |
| Toll Cost | ₹5,000 | ₹5,000 |
| Driver Salary (15%) | ₹8,500 | ₹7,000 |
| Miscellaneous Costs | ₹3,000 | ₹3,000 |
| Total Operating Cost | ₹33,100 | ₹31,600 |
| Revenue | ₹56,000 | ₹48,000 |
| Profit | ₹22,900 | ₹16,400 |
Stakeholder Impact
- Transporters/Truck Owners: Minimum freight rates ensure profitability, allowing transporters to maintain their vehicles and invest in business growth.
- Drivers: With transporters earning adequate profits, drivers can get better pay and working conditions.
- Shippers/Customers: While shippers might see a slight increase in costs, the benefits of truck availability, timely deliveries, and reduced negotiations will outweigh these changes.
Conclusion
The introduction of minimum freight rates is a necessary step to stabilize India’s trucking industry. By ensuring fair pricing, transporters, truck owners, and drivers will see improved earnings and working conditions. Although shippers may experience a slight increase in costs, they will benefit from better service quality and reliability. Overall, AIMTC’s push for this reform will make the transportation industry more stable and profitable in the long run.
Yoga Laxmi
Sometimes English is just silly. That's what got me hooked on writing in the first place. Why on earth can't "grateful" be spelled "greatful"? Here's the thing, I love untangling the knots of language just as much as I love untangling the complexities of logistics. In my blog posts, I'll do both! No "greatful" mistakes here, just good info and a smooth journey through the world of shipping.
