A driver exits a truck parked next to stacked shipping containers at the Jawaharlal Nehru Port, operated by Jawaharlal Nehru Port Trust, in Navi Mumbai, Maharashtra. (Photographer: Dhiraj Singh/Bloomberg)

Will Bigger Truckloads Reduce Freight Costs?

Increased weight limits for heavy trucks will apply to all commercial vehicles as the government looks to lower transportation costs.

Lower axle weight has often been cited as a reason for higher cost of logistics, the Ministry of Road Transport and Highways said in a notification today, clarifying that all new and old trucks are covered. A group of transport ministers of states recommended increasing the permissible weight, it said, stressing that the global norms are higher.

The revised caps increase the carrying capacity of goods vehicles by about 20-25 percent in a first such relaxation in 35 years. They can bring down logistics costs by about 2 percent, Union Transport Minister Nitin Gadkari said at a press meet.

Will Bigger Truckloads Reduce Freight Costs?

Strict implementation of overloading norms increased the cost of sand, stones and other construction material amid the government’s infrastructure push, Crisil had said in a report published before the new rules were notified. Logistics services providers said the new norms will help.

Future Supply Chain Solutions

It will help to bring down the total cost of transportation and reduce pressure on roads, said Sheshadri PV, chief executive officer of Future Supply Chain Solutions Ltd.

Logistics in India is highly inefficient as the cost is higher than global averages and this step is in the right direction to reduce it, he said. “Currently, total cost of logistics is pegged at 14 percent of gross domestic product. The government aims to reduce this to under 10 percent by 2022.”

Allcargo Logistics

Adarsh Hegde, joint managing director of Allcargo Logistics Ltd., agreed. “Supply-chain operations will be largely streamlined, and logistics costs will be substantially reduced.” This, he said, will exert a positive impact on the movement of goods across state borders.

The move will bring Indian standards on a par with global freight carrying standards, he said. “Increase in load carrying capacities will not only facilitate transport of dense bulk commodities by large fleet operators, but also improve the logistics competencies and supply chain margins.”

Transport Corporation Of India

Vineet Aggarwal, the chief executive officer of Transport Corporation of India Ltd., said the relaxation can improve operational efficiencies. But he doesn’t expect costs to fall as prices of other inputs like fuel, lubricants and wages have increased.