Nov 19, 1999|
Transporters hike freight rates by 18%
According to newspaper reports, the All India Motor Transport Congress (AIMTC) has directed its members to increase freight rates by a 'minimum' of 18% all over the country. The freight hike comes on top of the 20 – 30% hike affected earlier.
The move follows the government's decision to hike diesel prices (implemented in October). Another sop promised by the central government was to ask the state governments to fix minim freight rates by the end of the current month. This move, too, would lead to a firming up of rates.
The sharp rise in freight rates would eat into profit margins of companies if they were unable to pass on a corresponding price hike onto their consumers. This could hurt the nubile economic recovery.
Another fear is that with the government contemplating another diesel price hike, the transporters may again hike freight rates. This could further affect corporate profitability, and more generally, lead to higher inflation.
In order to tide over the dependency on the road transporters, the government should actively consider the sprucing up of the freight arm of the railways. Although, the railways would also feel the need for a freight hike (they use diesel engines), the extent of the hike would be marginal as compared to the road transporters. This is mainly due to economies arising from the quantum of fight carried per engine. However, due to the inefficiency of the system manufacturers prefer the costlier road route (even for long distance freight).
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