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<\/p>\nThe recurrent increases in fuel prices over the past 10 days are eating into the margins of transporters, who will be forced to pass on the hikes to their customers.<\/p>\n
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This, in turn, is set to make the prices of daily consumables and other goods dearer, affect consumption, and slow economic growth, said transporters and analysts.<\/p>\n
Freight rates on grand trunk routes have shot up 3-4 per cent month-on-month in the past few days, according to the Indian Foundation of Transport Research & Training (IFTRT).<\/p>\n
These are set to go up further if the fuel price hikes continue.<\/p>\n
“The incessant price hikes in small doses are like a ‘frog in boiling water’. If this continues, the freight rates will notch up to an all-time high by May,” said Jasjit Sethi, chief executive officer, TCI Supply Chain Solutions, adding, this was hitting transporters of all hues.<\/p>\n
Sunil Sinha, chief economist, India Ratings & Research, said the fuel price hikes would have a cascading impact on economic growth.<\/p>\n
“The daily price increases will impinge on the pockets of households.<\/p>\n
“They would spend more on fuel and cut expenditure on other items. This will impact GDP as consumption demand accounts for 57-58 per cent in it.”<\/p>\n
Oil-marketing companies (OMCs) hiked petrol and diesel prices on Thursday for the ninth time in the last 10 days.<\/p>\n
A litre of petrol in Delhi now costs Rs 101.81 as against Rs 101.01 previously, while diesel will be sold at Rs 93.07 against Rs 92.27 per litre earlier.<\/p>\n
In Mumbai, petrol costs Rs 116.72 per litre and diesel Rs 100.94 per litre. The fuel price in Mumbai is one of the highest among the metro cities.<\/p>\n
According to Sinha, the price adjustments that have taken place so far are not enough and more is required if the OMCs are to recover the costs.<\/p>\n
“Even an expectation of a further price increase will impact households,” he said, adding, that once the transport prices went up, prices across the board, including those of daily consumables, too would go up.<\/p>\n
While rising fuel prices are one part of the story, transporters looking to buy new\/old vehicles will have to folk out more.<\/p>\n
The creeping increments have affected the transporters’ sentiment adversely, said Vinod Aggarwal, managing director and chief executive officer (CEO), Volvo Eicher Commercial Vehicles (VECV).<\/p>\n
Prices of trucks across the range are set to go up from this month. VECV too will hike prices by 200 basis points from Friday, said Aggarwal.<\/p>\n
“Despite the headwinds, the recovery of commercial vehicles will remain on track,” said Aggarwal.<\/p>\n
Higher prices are hurting even large fleet operators, bound by monthly or quarterly contracts.<\/p>\n
They do not have an option but to absorb the hikes and take a hit on the margins.<\/p>\n
Fuel cost accounts for 85 per cent of the operating cost for a truck operator.<\/p>\n
Balmalkit Singh, chairman, core committee, All India Motor Transport Committee, said the recurrent hikes would jack up prices and stoke inflation.<\/p>\n
“We appeal to the government to review prices quarterly and bring them in the goods and services tax ambit, instead of a daily price increase.”<\/p>\n
Prices of tyres are up, toll charges have increased, and motor insurance premiums are also set to go up next month, he said.<\/p>\n
“There is no way transporters can absorb these costs.”<\/p>\n
S P Singh, senior fellow, IFTRT, said this was “much ado about nothing”. According to him, given the strong demand, the price hikes can easily be absorbed by transporters.<\/p>\n
The diesel price was frozen for 137 days but truck rentals went up even during this period.<\/p>\n
Transporters have enough cushion to absorb the increase.<\/p>\n