Commercial vehicle fleet operators in India have proposed to ask lenders such as banks and NBFCs to reschedule the EMI payments on loans taken for their vehicles purchase. These operators are looking at deferement of EMI payments at least by 4-6 months or till such a time demand for freight offerings pick up.
One of the truck operators’ association in India has already moved a leading commercial bank to defer the EMI payments at least for some months, sources in the know said.
The fleet operators’ decision to seek reschedulement of their EMI payments stems from the fact that due to slowdown in economy, the operators are witnessing decreased freight offerings (due to new axle norms), sharp fall in rentals (due to oversupply/competition) over the last few months. With the 15% deficit in rainfall so far this monsoon season, the fleet operators have now started seeing a sharp 40% drop in freight offerings owing to marked drop in commodities arrivals at APMCs as well from other industries such as automobile, cement and steel sectors.
Confirming the developments, Naveen Gupta, secretary-general, All India Motor Transport Congress (AIMTC), the apex body of truck/fleet operators in India, said, “Yes. We have decided to seek reschedulement of EMI payments at least for four to six months as we see things have not improved since the second half of last fiscal, when new axle load norms announced. The slowing economy and deficit in monsoon have also led to lack of freight offerings at the farm and industrial gates and hence the situation has become disturbing.”
“To be precise, one of our member association — Indore Truck Operators & Transport Association — has just written a letter to HDFC Bank (CV division branch), seeking moratorium and defer the EMI payments schedule at least for 3 months due to weak business,” Gupta said. “As a national body, we have decided to move the concerned authorities soon to devise plans for the fleet operators to come out of this grim situation,” he said, adding nearly 85% of our operators are small in nature with less than 10 trucks under their fleets.
According to him, the fleet operators have been in distress for the few months due to lack of freight offerings. Given the increasing insurance, permit and input costs coupled with poor fleet utilisation due to new axle norms, the income was not matching that of expenditures. With the glut in the market owing to oversupply of trucks, the rentals have been also falling down month-after-month.
Responding to a question, he further said, “The advent of aggregators/start-ups has further put pressure on our business as they charge freights comparatively lesser than us. It is possible for these aggregators to offer freights at lower prices as they are being funded by PE players at lesser interest rates as compared to banks and NBFCs.”
SP Singh, convenor, Indian Foundation of Transport Research and Training (IFTRT), said, “Now, trucks/trailers are waiting for 7-10 days on trunk routes to fetch return loads due to lack of commodities arrivals at APMCs. The offerings from industries have also come down owing to number of factors (slowing economy, sluggish automotive growth, weak realty business). Only non-fleet owning transport contractors have able to do business with low truck rentals despite increase in diesel price.
“The trucking business on way to collapse due to extremely weak all round economic situation, leading to a 40% drop in fleet utilisation. With every passing weak, the truck transportation business has been sliding southward and situation has become grim and even worse then similar situation prevailed in 2008-09 (global economic meltdown due to mortgage crisis in the US),” Singh pointed out.
According to an analyst with a leading broking firm, which tracks the CV sector, said, “Due to deficit monsoon, the agri inputs/outputs got affected in the last few weeks, hence APMCs see a marked drop in commodities’ arrival.
Currently, it’s been seen there is no major improvement on this front. We see there won’t be much improvement in Q2 and Q3 and it remained to be seen how the rainfall going to be in the remaining season. With 85-90% of the fleet operators being small and medium in nature, it is quite natural for them to seek deferement of EMI payments and it could be at least 3 to 4 months.”