TRUCKING IN INDIA: Vibrant, with room for improvement
The road network of a country is vital for its economic development and for social integration. Transportation by road scores over other modes of transport because of its easy accessibility, flexibility of operations, door-to-door service and reliability. Therefore, the share of roads in freight and passenger movement has been increasing vis-à-vis other transport modes. The spatial spread of the road network, its quality and access have a bearing on the cost of transportation.
According to data available from the Ministry of Road Transport and Highways the total road length of the country increased significantly from 3.99 lakh kms in 1951 to 48.65 lakh kms in 2012 (as on March 31), growing at a compound annual growth rate (CAGR) of 4.2 percent. According to the latest figures available, India’s road density at 1.48 kms/sq. km of area is higher than that of USA (0.67km/ sq km) and China (0.42 km/ sq. km). Of the total road length national highways account for only 1.58 percent (76,818 km) and the share of state highways is at 3.38 percent (1,64,360 km). More than half (58.33 percent or 28,38,220 km) of India’s road length belongs to rural roads.
Today, over 65 per cent of the country’s freight is being transported on trucks, which strongly confirms the modal shift of cargo transportation from rail to road. Yet, the sad part of it is that India’s National Highways constitute only about 1.7 percent of the road network, but this capacity carries around 40 percent of the total road traffic. According to available statistics, the number of road vehicles has been growing at an average pace of 12 percent per annum over the last five years.
Looked at from the cost angle, the primary modes for movement of goods in India are rail and road. During the past three decades, movement of goods by road has been gaining considerable momentum in India. The trucking industry has penetrated rapidly into the market through a strategy of wide range of services. Long ago, truckers started providing service from the platform of the consignor to the door of the consignee, besides accepting goods in small quantities, shaping themselves into vital tools in the manufacturing, transportation, and warehousing industries, and today in supply chain playing the key role in last-mile delivery.
Truck population in India is currently growing at a rate of 15 percent per annum, taking the current total number to over 2,000 trucks per million population and the utilisation of trucks to around 80,000 km per year, compared to the corresponding figures for the USA at 100 times more. In India, trucking industry is a significant player in cargo movement, carrying over 55 per cent of the tonne-km.
The main drivers for the trucking industry’s high growth are rapid rise in Indian domestic consumption which is expected to have a CAGR of 15 percent over the next five years. The country is said to witness an exploding growth in domestic consumption from the present $900 billion to $1.3 trillion by 2018, when there will be a need for all goods to be transported by road across the country, if not further, to reach the customers’ doorstep.
A secondary driver to trucking growth is the government of India’s regular plans for infrastructure development across the country. This has involved a push for heavy investment in roads, warehousing areas such as FTZs and FTWZs, SEZs and a movement advancing towards more public private partnerships.
These sterling results are despite road capacity in India being very low with most of the National Highways having two lanes or less; congestion on roads continues to pose a major challenge with over 25 percent of all of India’s National Highways being congested; poor quality and poor maintenance of the existing roads; and, corruption of government machinery which
Despite being blended with a key infrastructural value, an efficient system that plays a significant role in connecting various parts of the country and holding an apparent importance, the trucking sector in India has received scant attention. The inadequacy of transport infrastructure and lack of funding from government have been the crux of problems confronting the road freight sector. No one has forgotten the fact that trucking is the most important link that facilitates productivity and competitive efficiency, leading to rapid economic development of the country. Although the government policies on deregulation and other economic reforms have augmented the country’s road freight transport to some extent in the last decade, lack of privatisation has curtailed the availability of resources which can bring about a turnaround. The problems faced by this sector are multifarious and the issues and concerns require a multi-pronged solution.
It is true that both central and state governments are taking steps to reform the transport sector which include increasing public funding for transportation in the central government’s Five Year Plans, launching National Highway Development Programme, and Accelerated Road Development Programme for remote areas. But the attention of government continues to remain inadequate; and, the government machinery is yet to be revamped – the urgent steps to further restructure the basis of logistics approach aiming to achieve a quality supply chain performance.
Another factor affecting the efficiency of road freight transport is that it is run mostly by private operators most of whom own a single truck. Indian trucking industry comprises large number of many players such as truck drivers and owners who are sometimes different from operators, forwarders, booking agents, brokers, private financiers, etc. Transporters with fleet smaller than five trucks account for over two-thirds of the total trucks owned and operated in India and make up around 80 percent of revenues, according to sources from India Logistics Outlook.
In spite of India having the second largest road network in the world and a road transport industry with a dominant role in the contribution to economy with a share of 4.9 percent in India’s GDP, it is sad that road freight market is highly fragmented, dominated by large amount of small operators and built on an intricate and complex system of relationships and financial issues. It is disheartening to note that the industry’s apex bodies such as All India Motor Transport Congress (AIMTC), which is keen on stoppage of services and transport strikes for a variety of reasons, is sitting idle without a thought to initiate steps to make it an organised sector