This article is the first in the series of monthly insights we will be sharing with our readers and subscribers. To start with, we will analyze the observed patterns in the National Freight Indices across last 12 months. In the future, we will analyze movements for shorter periods such as a quarter or a month.
Open indices fell in Jun 2018 owing to the monsoons and picked up only in the Sep-Oct season due to Diwali related goods movement and early-harvest seasons of fruits (Apple, Orange). Container indices on the other hand picked up in Jun 2018 on account of relatively higher demand versus open trucks and hit peaks in Sep-Oct period when e-commerce firms held mega sales.
Price escalations are attributable partly to reduced supply base due to driver shortages during holiday season and selective city restrictions during the same time (Pujo, Diwali).
Both Open and Container followed diesel prices which peaked for the financial year in Oct 2018. Prima facie, freight indices for Open suggest Open truckers do not pass on diesel price escalations as fast as and to the extent that Container truckers do. This needs to be validated with a correlation analysis and subsequently with more data.
Interestingly, Trailers are immune to all the demand-supply triggers which affect Open and Container trucks. Price indices largely remained flat with minor drops in monsoons.
The gross vehicle weight (GVW) passing revisions allowable by the Ministry of Road Transport and Highways which came into effect in July 2018 did not have a visibly large impact on the rates. The revision allowed for 20-30% upward revision in loading capacities. Rivigo estimates suggest that the percentage of trucks which opted for higher GVW was in the range of 10-20% in Nov 2018 and 30-40% in Feb 2019. As awareness increases on both demand and supply sides, this number will likely inch towards 90-100% by end of FY20.
In the end of FY19, prices were close to Apr 2018 levels.