Why have Truck Freight Rates Risen 20% – 35% during Lockdown 4.0?

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Lockdown 4.0 has seen a rise in truck freight rates by 20%-35% across industries. For example: 

As per the President of  All India Motor Transport Corporation (AIMTC), “A truck coming from Pune to Delhi, carrying grapes, is now costing Rs 90,000 against the Rs 70,000 earlier as we are not getting any return cargo.”

As per SP Singh, Coordinator, Indian Foundation of Transport Research & Training (IFTRT) – “The Nashik-Delhi mango route has seen one way freight rise to Rs 75000 from Rs 45000.”

We have compiled below opinions of industry stakeholders on what could be the various reasons for this increase in truck freight rates:

  • Non-availability of loads on return journey is one of the major reasons for freight hike.
  • Truckers might be trying to make up for losses incurred during the first 3 phases of lockdown, when their trucks must have been empty.
  • Even now, as per an estimate, only one-third of 5.2 million goods carriers are on roads while other trucks are lying idle. An increase in freight rate helps truckers to compensate for the loss being incurred on idle trucks.
  • If a truck breaks down, repair services are not easily available currently – thereby adding to opportunity loss on that truck.
  • Non-availability of truck drivers is being seen as one of the most common reasons for increased fares. Taking the example of car carriers, specially skilled drivers are required to drive multi-axle car carriers. Given the demand-supply gap for skilled truck drivers, drivers are being offered higher salaries as incentives to get back to work. The driver supply problem has been further aggravated by the return of migrant labourers back home. 
  • Shippers like big e-commerce firms and manufacturers usually have annual contracts with transporters wherein the freight rates cannot be modified – hence transporters might be trying to compensate the loss incurred against these shippers by increasing freight rates for other shippers.
  • The increased cost of providing sanitation and protective equipment for drivers might also be factored in by truckers.

While such a rise in freight rates must be impacting industries, above reasons could be considered fair justifications for this development. Truck owners and drivers have faced extremely tough times in the past 2 months and some spillovers in the form of rate increases might be inevitable.

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