Truck rentals decline in November as demand softens: Report

Truck rentals, which had returned to normal levels in October after the festive season rush, saw a decline in November in most trunk routes as demand for transportation services softened with fleet occupancy levels dropping to around 60 per cent sequentially in the previous month, according to an industry report.

This decline is largely attributed to a combination of factors, including poor urban demand across categories, the BS4 truck ban in the NCR region on account of air pollution issues, polling activities in Maharashtra, and reduced agricultural produce movement, Shriram Finance said in its monthly bulletin.

A majority trucks in the business are BS IV-compliant and given the existing entry ban in the NCR, these trucks transport items to the NCR border from where the goods are loaded into smaller BS VI or CNG trucks to be transported for delivery, according to the company.

This has resulted in increasing the logistics costs in the region, it added. Elections in Maharashtra also slowing down logistics activity, as per Shriram Finance.

Truck rental rates (round tips) followed a downward trend, with rentals on key trunk routes like Delhi-Chennai-Delhi and Delhi-Bengaluru-Delhi declining 1.4 per cent and 1 per cent, respectively, on a month-on-month basis, it said.

"The festive season excitement has faded in the logistics sector. Private consumption, which makes up 60 per cent of GDP, grew by 6 per cent, down from 7.4 per cent in the first quarter.

This decline is due to weak urban consumption, higher food inflation, high borrowing costs, and weak real wage growth, despite a recovery in rural demand," Shriram Finance Ltd MD & CEO Y S Chakravarti said.

Trucking activity in the NCR nearly came to a halt with the ban on BS IV vehicles, he said. Fleet occupancy levels also dropped to a new low of 60 per cent, he said.

However, the bright spot is agricultural output, which rose 3.5 per cent year-on-year in July-September, up from 2 per cent growth in the previous quarter.

November 2024 witnessed a strong surge in sales for the two-wheeler segment at 27 per cent on a month-on-month basis, possibly due to spill over sales from Deepavali, which was on the last day of the previous month, the company said.

Agriculture tractor segment, which grew 29 per cent sequentially, was the only other section to see growth. Similarly, sales of commercial vehicles also saw a sharp decline with sales of buses dropping by 32 per cent, it added.

The sales of EVs, (two, three and four wheelers), continued declining, except for the month of October where festive season offers boosted the sales to some extent, as per the bulletin.

While the sales of electric cars dropped by 38 per cent on a month-on-month basis, the sales of electric two-wheelers dropped by 19 per cen on a month-on-month basis.