Freight rates may jump 20% as diesel costs surge, warn transporters

Indore: Rising diesel prices and mounting operating costs are beginning to raise concerns over a fresh wave of logistics-led inflation with transport operators warning that freight rates may increase by at least 20 per cent in the near term.

They said a sustained increase in freight charges could push up prices of several daily-use products including milk, fruits, vegetables, kirana items, edible oils and FMCG goods as transportation costs ripple through supply chains.

Fuel alone accounts for nearly 40-50 per cent of trucking operating costs, making diesel one of the largest cost components in freight movement.

Rising prices of tyres, spare parts, lubricants and maintenance expenses are further adding pressure on operators already facing weak cargo movement and lower margins.

“Our overall input cost has gone up by nearly 20 per cent because everything, be it fuel, tyres or auto parts, has become costlier. So far, we were absorbing the increase, but now we have reached a threshold and are considering raising freight rates by at least 20 per cent,” said CL Mukati, president of the Indore Truck Operators and Transport Association.

Indore’s fuel prices at present stand at Rs 109.81 a litre for petrol and Rs 95.02 for diesel, keeping fuel costs in MP among the highest compared to several neighbouring states.

There are around 7.5-8 lakh commercial vehicles in Madhya Pradesh and over 50,000 transporters. Industry associations estimate daily commercial vehicle movement at around 2-2.5 lakh vehicles, making freight movement a key link in supply chains across sectors.

Transporters said nearly 25-30 per cent of commercial vehicles are currently lying idle because of weak cargo movement and subdued demand, adding to pressure on profitability.

“Fuel prices in Madhya Pradesh were already higher than many neighbouring states and this recent hike has made things worse. Transporters from other states are eating into our business because we are unable to offer competitive freight rates,” said Kamal Panjwani, president of Truck Transport Owner Welfare Association, Bhopal.

Industry representatives said agriculture, dairy, pharmaceuticals and manufacturing sectors could face indirect impacts due to higher logistics costs.

“There has already been a gradual rise in prices of almost all commodities, but this fuel hike is steep and it will directly impact daily-need products and make them more expensive,” said Ramesh Khandelwal, president of Siyaganj Wholesale Kirana Merchant Association.