Rising diesel prices, a shortage of drivers and various other costs could drive small truck operators out of business, fear transporters in Namakkal, a hub for the sector in South India.

"Ours is the third generation in this business. The first and second generations were satisfied despite many hardships, but the current generation is worried as whatever we earn, we spend, leaving hardly any profit and making it hard to operate vehicles. The next generation is hesitant to enter this business," said R Vangili, President, Namakkal Taluk Lorry Owners Association.

He was delivering his special address at ’Lead the Road’, a transporters’ meet organised at Namakkal recently by BusinessLine, in association with Indian Oil Corporation, YES Bank and Zoho Creator. He added that demonetisation and GST made things worse as it hurt demand and led to shortage of cargo.

Later, while participating in a panel discussion, Vangili said agriculture and the truck industry are considered the backbone of the economy. "However, only our backbones are broken as there is no support from the government," he added. The discussion was moderated by Business Line’s Associate Editor N Madhavan.

P Mohan of SPM Transports said the increasing price of diesel and declining freight rates were a double whammy for the industry, 50 per cent of which is unorganised. "There is nothing in our hands and we get no support or guidance from the government," he said.

He also operators with lower-capacity trucks were being eaten up by players who own bigger vehicles. Despite business being dull, most small players continue in the business as they do not have the expertise or the wherewithal to start afresh in other industries or sectors. The only consolation is that the vehicles fetch a good price even after five years of use, SPM Transport’s Mohan said.

M Ponnambalam, President, Southern Region Bulk LPG Transport Owners Association, urged the government to fix freight rates to benefit transporters. This industry is dependent purely on ’external sources’ (like brokers) to fix the rates, he said.

"However, this phase will change. It will take time for GST and demonetisation to settle down. There is a stress in the industry. However, future is bright," said C Balasubramanian, Senior General Manager (Operations), Sundaram Finance.

Anil Menon, National Business Head (Commercial Vehicle Loans), YES Bank agreed. He pointed to the strong GDP growth numbers released last week to suggest that things were beginning to look good. "We have seen many cycles like this in the past," he added.

Responding to frequent price revisions of diesel, T Palanikumar, DGM (Retail Sales), IndianOil Corporation, explained that oil companies were allowed to fix daily retail prices for fuel by factoring in global crude rates, the value of the rupee, and the supply and demand for fuel. When the global crude rates fall, transporters immediately realise the benefits. "In the long term, only customers will benefit from daily pricing," he said.