Mumbai: Transporters are raising freight rates to pass on the fuel price hike, but with higher inflation looming, operational efficiencies need to kick in, officials said on Thursday.
The government raised petrol and diesel prices the second time this year by about 10% to curb losses at its state- run refineries. Crude oil prices have risen more than 30% this year to break a crucial $130-a-barrel level two weeks ago.
“Fuel constitutes 50-60% of the total cost, therefore, this time it will be difficult for logistics companies to absorb the hike,” said Vineet Agarwal, executive director of Transport Corp. of India Ltd.
The firm will raise freight costs by 3-4% immediately due to the lean season for the business, but will eventually raise rates by 5%, Agarwal said.
“As 70-75% of our customers operate on a contractual basis, the hike will be passed on to them immediately.”
“The freight rate will go up like anything because of the increase. It will impact every commodity,” said S.M. Jalan, managing director of trucking and warehousing services firm, TCI Hi-Ways Pvt. Ltd.
Movers Elbee Express Pvt. Ltd has also raised prices by an average 35-40%, said Nikhil Shah, executive director.
Blue Dart Express Ltd and DTDC Courier and Cargo Ltd, in which Reliance Capital Ltd owns about 40%, also operate in the express delivery space.
“We are improving efficiencies and trying to drive down our dependency on fuel through route management and fuel-efficient vehicles,” Elbee’s Shah said.
Container transporters are trying to decrease dependency on road transport and move cargo via trains and coastal shipping.
“Trucking will be used as the last mile connectivity,” Sudhir Rangnekar, managing director of Sical Logistics Ltd, said. “This will give a fillip to other transportation means.”