Capacity Utilization of Trucks Could Rise Further to 70% by June end

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As India unlocks from the Covid lockdowns in June, transporters can hope for increased truck movements in the weeks to come. In May itself, when the lockdown had been relaxed in many districts, the capacity utilization of trucks was at 30%-35%. The number of trucks moving freight had doubled to 2.2-2.5 million in May as compared to April. An important factor for the improvement in May was the fact that there was sustained demand for essential goods and the supply chains smoothly met this demand.

Transport Corporation of India (TCI) which uses 12000 trucks (owning 2000 of them) and is India’s largest logistics provider, has also given its estimation. TCI expects fleet utilisation to further rise to 50-70% by the end of June.

Positive factors and indications for truck demand in June are as follows:

  • With Unlock 1.0, industrial activity has started reviving all over India. This should naturally result in higher demand for trucks.
  • The kharif harvest is also under way. A strong harvest could boost capacity utilisation. 
  • The passenger car and two-wheeler segment is planning to raise output to 25-30% of capacity from the current 10-15%. This should result in increased freight movement.
  • As per ICICI Securities in its June 5 Covid Recovery Pulse note – Auto retail registrations, a barometer of on-ground demand, have risen in the past 10 days and have reached 30% of pre-Covid levels. This is an indicator of the beginnings of possible demand recovery. 
  • Infact, E-Way bill generations in May stood at 2.6 crore, which is 46% of the average monthly generation of 5.5 crore bills in the pre-Covid months of October 2019-February 2020. In April, the same generation was at 16% levels. One can certainly hope for a further improvement in June.

Wheelseye would hence encourage truck-owners to be optimistic of greater business volumes in the month of June. 

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