The efforts of the government and various other forces to improve CV utilisation are bearing fruits.

Story by  Bhushan Mhapralkar

An improvement in CV utilisation is apparent on the back of some of the industries starting operations. An improvement in CV utilisation is also apparent with the agricultural supply chain gaining steam. As major urban centres like Delhi, Mumbai, Pune and Indore continue to fight the risk of further spread of Covid-19, an improvement in CV utilisation is supported by the starting of activities in regions other than the key urban centres of the country. Not in the best of its spirit and health, an improvement in CV utilisation is subject to many challenges yet, in its path to glory. Instances like looting of trucks by mobs demanding food are some of the challenges that need to be dealt with immediately. Highlighting the lacuna in government distribution systems that are designed to ensure that the poor do not starve, the looting of trucks sounds like a dangerous development that could derail the movement of trucks as well as the rise of the economy.

Mentioned Jasbinder Singh Saluja, owner of Saluja Company, that a mob of around 100 people obstructed his truck in a north Indian state and demanded food. “By the time the cops could reach the spot, they began looting it,” he informed. “It was the presence of mind of the driver that he could flee the spot and save himself as well and the truck and the cargo,” added Jasbinder Singh. Capable of disrupting the movement of trucks and deflating efforts to uplift the economy, such instances need to be addressed firmly by tackling the shortcoming in the distribution system. Especially in view of the statistic that road freight (transport) measures three-and-a-half-times in billion-tonne kilometer term over railways. Highlighting a departure from the days of chaos and fear as states scrambled to close their borders and impose Section 144, the improvement in CV utilisation marks a positive development that needs to be safeguarded and nurtured in the interest of national growth and economy. Averred Vipin Sondhi, Managing Director & CEO, Ashok Leyland Limited, “Truckers need to be cared for as logistics and transportation is the backbone of the economy.” “Some measures that the Government could take is to provide minimum wages to the drivers and ensure their benefits are looked after; provide them insurance, ensure their health and safety, regulate and mandate their working conditions (through measures like cabin regulation) and provide them food, water and essentials,” he said.

With an estimated 70 per cent movement of cargo in the country by road, an improvement in CV utilisation is reflective of the demand cycle kicking in. Following a period of economic dullness and stagnation due to the Covid-19 induced lockdown, an improvement in CV utilisation spells good news for the CV industry, which has found itself in stormy weather for an amount of time. Instances like demonetisation, implementation of GST (followed by e-WayBill implementation and a rise in compliance costs), rising fuel costs, insurance costs, rising consumable costs, new axle norms, BSIV fuel emission regulations (most M&HCVs saw a rise in operating costs because of SCR systems onboard) and stagnant freight rates affected not just the road freight (transport) fraternity, but also the CV industry, which comprises of CV manufacturers, parts suppliers, dealers and a host of other segments and sectors linked to it.

If the improvement in CV utilisation marks a positive amid a dull and challenging environment, it is necessary that the efforts of the Reserve Bank of India (RBI) to support SMEs bear fruits sooner than later. It would also mark a departure from the near collapse of the supply chain during the lockdown period that saw restrictions and confusion reign supreme, making it tough even for CVs carrying essential goods (like LPG cylinders) and essential services personnel to ply. Mentioned an industry analyst, that the RBI measures to relax repayment pressures and improve access to working capital are aimed at minimising friction arising out of a cash flow mismatch situation Covid-19 has thrown in front. The efforts are to ensure the return of demand should contribute to further improvement in CV utilisation, he expressed.

The challenges

Apart from the availability of capital, any further improvement in CV utilisation will hinge on the ability to address the issue of driver shortage, remarked an industry observer. He mentioned that the availability of drivers and the loading and unloading workers is directly linked with the number of trucks on the road. The more trucks there are on the road, the better the utilisation level would be, he added. Pointing at the government measure to permit trucks to operate empty on a return journey, or on the way to pick-up consignment, the industry analyst called for additional measures to bolster the confidence of transporters and CV drivers. Expressed S P Singh of IFTRT that CV drivers simply fled to their villages and did not report to work after they heard the stories of CVs and their crew getting stranded with nowhere to look for safety, food, medicine, sanitation, masks or sanitisers. The ripple effect the stories caused was big, he opined. Stressing on the need to make CV drivers feel respected and cared for, the observer also called for bolstering the confidence of those involved in making invoices, Proof of Delivery (PoD), etc.
Mentioning that 23 trucks of his transport company got stranded at various locations in the country during the lockdown, a Delhi-based transporter rued that not only did his crew and trucks with costly cargo on them were stranded with nowhere to look for safety and food, the loss incurred would take a long time to get over. Any improvement in CV utilisation will happen on the back of measures to relieve the road freight (transport) fraternity of their challenges, he said.

With an estimated 3.5 lakh trucks getting stranded with goods worth Rs 35,000 crore laden on them during late March and the first half of April, an improvement in CV utilisation is widely linked to the government move to open dhabas along the highways (at an interval of 50 km each), according to the industry observer. Stating that many dhaba owners are however not aware of such a development, he called for an effective way to communicate the same. Of the opinion that the opening of eateries has provided hopes for drivers and transporters to start operations, Baba Shinde, President, Maharashtra State Vahan Chalak Malak Pratinidhi Sanghatna and a member of AIMTC, informed that close to 10 lakh trucks were stranded at different checkpoints and industrial areas in Maharashtra. Speaking over phone enroute to Nagpur from the Tata Steel plant in Odisha, after spending a month of lockdown there, truck driver Anil Pandey mentioned that traffic density is thin on the roads. He revealed that some dhabas are open, and are providing food quietly inside the truck rather than at their premises.
Mentioned a dhaba owner over the phone that they were not prepared in terms of resources after being forced to abruptly close down their business. With no income for over a month and having relieved the employees from their duty in the absence of any ability to pay them, he informed that it would take an amount of time and effort to start operations. Expressed another dhaba owner from Manor on the Mumbai-Ahmedabad highway that there’s hardly any traffic on the highway to run the dhaba. He stressed on the supply and demand situation being erratic. Remarked the industry observer as well, that dhabas amount to just one part of the ecosystem, there are others too (like tyre repair shops, spare parts shops, garages, etc.) that need to come on board to support a sustainable improvement in CV utilisation.

The ecosystem

With the supporting ecosystem at one end and the vested interests at the other, road freight (transport) fraternity to improve CV utilisation is certain to need a lot of support from the government. Demanding the reigning in of vested interests on roads (they continued to harass even those truckers that carried essential goods during the lockdown), a transporter drew attention to the recent study by SaveLife Foundation, which states that trucks drivers and fleet owners shell out around Rs.48,000 crore annually as bribes to traffic or highway police. Remarked a transport association member that no benefits of borderless travel will be evident unless the vested interests on roads are firmly dealt with. Lauding the Central Government’s efforts to allow trucks to cross state borders by simply showing the driving license of the driver, he mentioned a need for the Centre and states to be on the same page regarding transport policies and discipline. Expressed a Rajasthan-based transporter, that some states are yet to give permission to warehouses to start operation. There are others that are yet to allow the opening of their borders, he quipped. Under such circumstances, it is not easy to operate more and more trucks, he added.
If the improvement in CV utilisation may amount to a big development, the chance of the CV industry gaining traction quickly looks a little far fetched at this moment in time. The pre-buying season turning out to be a washout, it would be essential to understand the benefits of the Supreme Court order to sell 10 per cent BSIV vehicles in the first 10 days of BSVI emission regulation implementation. The implementation of BSVI emission regulations are only expected to add to the dullness the CV industry has been facing, mentioned the analyst. Lauding the efforts of the CV industry to support their clients despite numerous difficulties during the lockdown, he mentioned that the disruption in supply chains will take a good deal of time to return to normalcy. Underlining the global nature of the industry, he added that plenty of challenges existed yet, and at various levels.

The measures

Drawing attention to the demands of the auto industry to reduce GST rates, an industry analyst said that the compliance burden put by GST on small transporters almost wiped them out during the last fiscal. For those that managed to stay afloat, the lockdown is certain to wipe them out, he stated. He also highlighted the rising pressure on mid-level transporters and how it could spell a death knell for them if no measures were announced to help the road freight (transport) fraternity to sustain. Citing measures like forward and service charge, he mentioned small and mid-level transporters have been under immense pressure with some well-meaning measures by the government actually hampering their progress. He added that the time now was to move very cautiously as one wrong move would spell doom for the lower rung of the road freight (transport) fraternity and in-turn cause some unimaginable as well as ugly disruptions.
Suggesting that the government better announce a regulatory policies holiday for the auto industry and the road freight (transport) fraternity if not for others, the industry observer explained that a lot of measures will have to be undertaken to ensure that the improvement in CV utilisation continues and contributes to the economic rise in-turn. Citing the collapse of daily movement of CVs to less than 10 per cent during the lockdown, he remarked that care should be taken to not let trucking become a major choke point in the wake of the efforts taken to beat Covid-19 as well to improve the economy. Drawing attention to the situation that followed the eight-day truck strike in 2018, which demanded a roll-back of diesel price increase, implementation of e-WayBill, increase in the validity of vehicle fitness, early resolution of GST related issues and provision of schemes for health care of drivers and crew, he expressed that any interruption in the smooth operation of the supply chain would prove to be costly at this juncture.
Lauding the efforts of the government to provide a ‘formal’ identity to the road freight (transport) industry, a big-fleet operator mentioned that the government has been paying attention to the demands of the road freight (transport) fraternity. He drew attention to its stakeholders participating in the National Logistics Task Force meeting on March 31, 2020, and securing the passage of trucks carrying essential and non-essential goods. He informed that they also managed to get an in-principal okay to the suspension of e-bills for essential goods, provision of insurance up to Rs.50 lakh to all logistics personals and setting up of a central helpline for truck drivers. Pointing at the directions issued by MHA to state governments to protect all facilities in the supply chain of essentials and medical equipment: farmers, manufacturers, suppliers, distributors, transporters and retail outlets, the industry analyst mentioned that unfreezing of operation at various logistics and supply chain specialists like Future Supply Chain, DHL Express, Ecom Express, Safexpress, etc., would contribute further to improve CV utilisation. The need, he said, is to bolster the confidence of the workforce by letting them feel that they are cared for.

A positive outlook

Of the opinion that the IRDA announcement to keep the motor third party (TP) insurance rates unchanged beyond March 31 amid the coronavirus (COVID-19) outbreak should be extended until a sizable improvement in the economy (alternatively the market condition) is visible, the industry observer remarked that the government is rightly concentrating on getting the food supply chain going over others. This will strengthen the agricultural supply chain and spur a cycle of demand in rural India, he said. Claiming that the move by one of the 11 empowered committees (set by Prime Minister Narendra Modi in late March 2020 to tackle the pandemic) to allow trucks to cross state borders by simply showing the driving license of the driver (and have a spotter onboard too) has contributed to an improvement in CV utilisation, an industry analyst mentioned that a more organized road freight (transport) fraternity is certain to call for some big ticket reforms. He drew attention to the demand for Electronic Proof of Delivery (ePOD) acceptance rising in the wake of the need to clock higher uptime. Currently the time taken at loading and unloading points is quite high, especially in the wake of the shortage of manpower, he added. Drawing attention to the global supply chain woes as many continents strive to come out from under the shadow of the pandemic, the industry observer mentioned that a sizable improvement in CV utilisation will only be visible after a while.