A dip in demand for freight haulage reflects broader uncertainties in the nation's growth trajectory.
08 Mar 2025 | 2795 Views | By Shahkar Abidi
For those who track the news of commerce, the rumble of diesel engines across India's vast highway network has long been a reassuring indicator of economic vitality. But a recent dispatch from Shriram Mobility, attuned to the pulse of the transportation sector, suggests a deceleration.
Truck rentals, a bellwether ...
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For those who track the news of commerce, the rumble of diesel engines across India's vast highway network has long been a reassuring indicator of economic vitality. But a recent dispatch from Shriram Mobility, attuned to the pulse of the transportation sector, suggests a deceleration.
Truck rentals, a bellwether of goods movement, are displaying an uncharacteristic sluggishness, mirroring a wider recalibration of economic expectations. This dip, attributed to a confluence of factors—general slowdown in industrial activity, tepid infrastructure demand, and the perennial caution of the fiscal year-end—paints a picture of muted momentum in Asia's third-largest economy.
The granular data reveals a nuanced, if somewhat downbeat, indicator. While certain arterial routes, the lifelines connecting Delhi to Kolkata and Bengaluru to Mumbai, have witnessed marginal upticks in haulage rates (1.3% and 1.6% respectively), these pale in comparison to the broader contraction.
The crucial Delhi-Hyderabad corridor, for instance, experienced a 1.1% month-on-month decline. These fluctuations, though seemingly minor, are closely analyzed by economists and industry analysts as leading indicators of supply chain health and overall demand.
As Y S Chakravarti, Managing Director and CEO of Shriram Finance Ltd., said, "The demand for trucks in February was lackluster".
This softening in trucking profitability is not an isolated tremor. It arrives in tandem with a generalized slowdown in vehicle sales across the automotive spectrum. Indian consumers and businesses, it appears, are tightening their belts, postponing capital expenditures in anticipation of the customary fiscal year-end incentives that dealerships roll out in March and April.
The numbers are stark: passenger car sales plummeted by 37% month-on-month, while the agricultural sector, often considered a resilient pillar of the Indian economy, saw tractor and trailer sales slump by 30% and 31% respectively. Even the commercial vehicle segment, the very backbone of the freight industry, is showing signs of strain, with goods carrier sales down by 18%, three-wheeled goods vehicle sales declining by 10%, and commercial tractor sales shrinking by 17%.
Further corroborating this narrative of deceleration are indicators from the fuel and digital transaction spheres. February witnessed a reduction in both petrol and diesel consumption, a straightforward proxy for diminished vehicular activity. Simultaneously, FASTag transactions—the electronic toll collection system—remained static in both volume and value, suggesting a plateauing, if not a decline, in road transport and logistics activity.
This convergence of data points – from rental rates to vehicle sales, fuel consumption to toll transactions – underscores a palpable hesitancy within the Indian economy as businesses adopt a wait-and-see posture ahead of the new fiscal year commencing in April.
Adding to the climate of economic circumspection, the persistent geopolitical volatility, analysts point out, particularly the looming specter of tariff escalations on the international stage. These global uncertainties are, predictably, making investors skittish, further contributing to the atmosphere of caution.
"The impact of the rate cut by RBI is yet to percolate down to borrowers totally as interest rate resets are underway" Chakravarti adds.
However, things seem to be getting better. India's real Gross Domestic Product (GDP) grew 6.2% during the October to December 2024 quarter, up from the 5.6% growth recorded in the previous quarter, according to data released by the National Statistics Office. This nonetheless was the slowest since the last quarter of FY2023. This leaves the Indian economy with considerable ground to cover in Q4FY2025 if it is to meet the full-year revised growth target of 6.5%
However, the approaching fiscal year-end is anticipated to inject a dose of energy into the market, potentially driving increased fleet utilization and vehicle sales, the report by Shriram Mobility adds. With manufacturers expected to ramp up dispatches and dealerships poised to offer attractive new fiscal year discounts, there is a tentative expectation of a demand rebound across vehicle segments.
Furthermore, the government's stated commitment to increased infrastructure spending in the upcoming fiscal year is widely viewed as a potential catalyst for commercial vehicle sales and freight movement, offering a longer-term horizon of hope for the sector. Whether this optimism will translate into a tangible resurgence in the trucking industry, and by extension, the broader Indian economy, remains, for now, an open road.