Indian Road Freight Transport Industry

Jun, 2013   |   Care Research   |   Format : PDF

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The Road Freight Transport Industry (RFTI) has always been backbone for the economic growth of a nation. Inspite of presence of some big organized players in the industry, unorganized players continue to remain the face of road freight industry in India. With around 85 per cent share from unorganized sector industry is highly competitive.

The report gives valuable insights of the RFTI encompassing comparative analysis of various modal share. The report also focuses on key regulatory issues and provides a detailed note on transport operators profitability. The report emphasizes on Indian Railways (IR) and initiatives taken by IR over the last few years.

CARE Research has developed detailed statistical models that attempt to forecast the domestic freight demand and transporters profitability. Sensitivity analysis has been done to analyze the profitability of the transport operators with respect to different vehicle-mix.

The report provides CARE Researchs estimation of freight demand along with insights on industry structure and other aspects like regulatory scenario, transport operators profitability, Indian Railways and upcoming investments in road infrastructure.

The report is indispen

Freight Demand Estimation

Healthy Indian economy ensured robust growth for freight industry in last one decade
Sluggish economic scenario led to slowdown in freight movement during FY13
Greater connectivity and flexibility led roadways to be preferable mode of transport
Industry structure The unorganized segment dominate the road freight transport industry
Tough economic environment in FY13, severely impacted the profitability of small transport operators
Long haul movements fuelled growth in primary freight movement prior to FY13
However slowdown in primary freight demand substantially impacted long haul movement the most in FY13
Freight movement to witness healthy growth in medium term, short term concerns to tapering off gradually
Roadways to remain dominant modal share in freight transport industry
Long haul movement expected to witness higher growth in medium to long term
Redistribution demand would continue to fuel growth in the industry in medium to long term period

Evolution of Freight Transport Industry 
Pre historic 
British colonial Rule 
Post Independence 
Pre economic liberalization period (1947-1991)
Post- economic liberalization period (1991 onwards)

Industry Structure 
Customer/ Consignor 
Transport Operator 
- Small Fleet Operators (SFOs)
- Large Fleet Operators (LFOs)
- Medium Fleet Operators (MFOs)
Model of inter-relation among various participants 
Haulage-wise operations
- End- to- end service (National Operations)
- Inter-regional operations 
- Intra-regional operations 
- Local operations 
Competitive scenario 

Transport Operators Profitability 
Operational factors 
- Vehicle Utilization
- Vehicle Mix
- Lead Time
Financial Parameters
- Wage cost
- Capital Cost
- Agent Commission
- Regulatory Scenario
- Competitive Scenario 
Transport operators profitability 
- Revenue Model
- Cost Components
- Freight Demand 
- Haulage wise operation
- Investment capability
- Risk Diversification

Regulatory Scenario
The Motor Transport Workers Act,1961
Carriage of Goods Act,2007
Motor Vehicles Act,1988
- Emission Norms 
- Overloading 
- Vehicle Age norms 
Financial regulations 
- Tax norms 
- Value Added Tax 
- Central Sales Tax 

Road Infrastructure 
Freight Movement 
- Laggard in implementation of road infrastructure projects have restricted roadways to keep the pace with freight movement 
Public private partnership (PPP)
Current Scenario
Future Investments in Road Sector 
Major Initiatives in budget 2013-14 

Indian Railways (IR)
Overview of Indian Railways 
IR key mode of transportation historically 
IR- A tale of missed opportunities
Regaining lost glory gradually 
Initiatives taken by IR 
- Freight rate reforms led the turnaround for IR
- Liberalized Wagon Investment Scheme
- Terminal Development Scheme
- Wagon leasing policy
Operational Parameters 
- Dedicated freight corridor services A catalyst for freight business of IR
- Other investments 
- Project funding
Financial Performance 
- Freight earnings continue to drive growth in IRs revenue
- Rise in employee cost following the implementation of VI Central Pay Commission pulled down the profitability of Railways 
- Rise in freight charges is likely to affect the freight revenue 
- Introduction of Fuel adjustment component (FAC) will minimize the impact of change in fuel prices on operating expenses

Allcargo Logistics
Arshiya International 
Chartered Logistics 

List of Graphs and Tables


Outlook on Freight Demand Estimation 
Trend in key macro economic variables
Trend in freight movement 
Trend in modal share in freight movement 
Trend in ownership patterns in road freight transport industry
Hub and spoke model 
Share of haulage wise road freight movement 
Outlook on total freight movement 
Outlook on modal share in freight movement 
Outlook on haulage wise in road freight movement
Industry Structure 
Key components of value chain in road freight transport industry 
Models of interrelation
Hub and spoke model (Haulage wise)
Competitive framework

Transport Operators Profitability 
Framework of transporters profitability 
Estimated trend in average capacity utilisation levels in road freight transport industry
Vehicle wise profitability snapshot 
Trend in repo rate movement
Income calculation of 9T and 16T payload capacity truck
Cost comparison between 9T and 16T payload capacity truck
Sensitivity analysis
Regulatory Scenario
Regulatory Framework
Change in technology for meeting various emission norms 
Permissible limits for different categories of trucks 

Road Infrastructure 
Growth in road network
Trend in share of railways and roadways in total freight movement 
Trend in national highways added in different five year plans
Current scenario in road infrastructure
Status of NHDP (as on February 2013)
Trend in investment in the road sector during the five year plan period

Indian Railways 
Indian Railways Key parameters 
Categorization of different initiatives taken by government 
Project Completion Schedule for DFC
Categorization of investments as per Vision 2020
Trend in growth of freight revenue
Trend in Operating Ratio of Indian Railways

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