Financial Daily from THE HINDU group of publications
Monday, Dec 26, 2005
Industry & Economy - Courts/Legal Issues
SC order on overloading Truck rentals go up
No more overloading.
The increase in rentals during this period not only bucks the usual trend, but has happened despite no increase in the cost of inputs such as fuel price and tyres.
According to the Indian Foundation of Transport Research and Training (IFTRT), a research body that tracks the sector, there has been an unprecedented 10-18 per cent hike in truck rentals on trunk routes in the last four weeks (November 20-December) compared to a 4-6 per cent drop in the same period last year.
The trend during the past decade shows that truck rentals tend to decline from mid-November on, after the peak festival season.
The IFTRT points out that there has been no increase in the truckers' input cost on diesel, tyres or auto components in the last two months, which could have warranted an increase in rentals.
Supreme Court Order
The only movement during the period that could have resulted in this increase is the Supreme Court order dated November 9, 2005, that banned overloading of goods trucks and trailers in excess of prescribed gross vehicle weight (GVW). The order quashed those State Government notifications that allowed issuance of special `gold cards' or tokens to permit open-ended carriage of excess load.
The issuance of these cards was contrary to provisions of Central Motor Vehicle (CMV) Act, 1988.
Earlier, State governments permitted the overloading of goods carriages by charging a monthly fee ranging Rs 4,000-Rs 6,000 for light and heavy goods vehicles under a premium gold card scheme.
As a result of the order, States have stopped issuing gold cards. The fine under the CMV Act is Rs 3,000 for the first excess tonne and Rs 1,000 for every additional tonne over-load. The Apex Court has further upheld that an overloaded truck cannot proceed on its journey unless the enforcement authority has ensured that the vehicle weight has been brought to the prescribed load limit.
Also it mandated that the excess cargo would be offloaded at the risk and cost of the vehicle owner before it is permitted to carry on with the journey even after payment of penalty.
Impact on truckers and contractors
With the Supreme Court order being enforced, truckers are now forced to pay stiff fines compared to that during the period when they were using gold cards or tokens issued by various State governments, said the IFTRT. This has pushed up the running cost of truckers, who , in turn, have raised truck rentals steeply in the last four-five weeks, it added.
However, the transport contractors (who hire vehicles from truckers) are unable to pass the escalation on to corporate consignors as they are under Annual Rate Contracts.
The transport contractors can revise their freight rates only in case of any increase in the price of diesel and other inputs, as reflected in the variation clause of their rate contracts with the consignors. Hence, for transport contractors, who usually hire over 95 per cent of their fleet requirement from the market, there has been a dent in the realisations. There are four million goods vehicles in the country, of which 1.2 million operate on trunk routes and carry 45 per cent of the national cargo.
According to the IFTRT, before the Supreme Court order, the goods carriages regularly over-loaded 50-150 per cent the gross vehicle weight (GVW). The enforcement of the court order has pushed up the running cost of the truck operators as their per trip expenditure has gone up by two to two-and-half times in the last four-five weeks.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line