Autobayng News Team
Transporters said fleets are going to be stretched.“>
India’s roads are set to be flooded by trucks carrying orders as the revamped goods and services tax (GST) kicks off September 22, with the usual festive season bump expected to turn into a sharp consumption spike that will carry on through Diwali to the year-end. Buyers are said to be holding off on purchases, planning to splurge as soon as the indirect tax overhaul leads to slashed prices across a vast range of goods.Automakers, consumer electronics firms, retailers and ecommerce platforms are on overdrive to book trucks and beef up logistics infrastructure for the festive season, a demand windfall in sight. Retailers want products only from September 22, when GST 2.0 kicks in. Stocking has been at bare minimum for a month now. By some estimates, automakers alone will need close to 60,000 truck trips over three weeks. They did 40,000 trips in the entire festive season last year. Executives said companies will have to move stock meant for a month in less time than that.“You are expecting the whole month’s retail in just nine days in September,” said Partho Banerjee, senior executive officer, sales and marketing, Maruti Suzuki India.
Transporters Up Fee
“Obviously, it will be an operational issue,” said Banerjee of the country’s largest car manufacturer. Dispatches have been stopped entirely, he added, even as dealers press for small cars. That entry level segment is seen reviving, with the vehicles being taxed less.
Since truck shortages will become acute from September 22, Haier India is stocking appliances in local warehouses, where price stickers with lower GST will be applied before being dispatched to retailers, said Satish NS, president at India’s third-largest electronics company.Car companies expect to sell 450,000-475,000 cars from Navratri to DiwaliBhai Duj (September 22-October 23), compared with 400,000 units dispatched in the same season (October 2 -November 3) last year, alongside millions of two-wheelers, tractors and commercial vehicles. They will need rapid dispatch from factories to dealerships within a narrow three-week window, while companies in other sectors too prepare to push a record amount of inventory into the market. For instance, the industry expects to sell 3.5-4 million large screen TVs, double what it sells in amonth usually.While logistics companies are racing to add trucking capacities and even contracting additional rail rakes, industry is worried that supplies may be constrained and could derail some sales if products at new GST prices cannot reach stores on time. Ecommerce companies Flipkart and Amazon are scaling up logistics requirements beyond what they estimate, said industry executives. The former’s logistics and delivery fleet will be 1.5 times more than last year, while the latter said it is beefing up its supply chain and delivery infrastructure, including 45 new delivery stations. A senior executive of a leading electronics company said it has reached out to more transport companies in addition to its contracted fleet. These transporters are already asking for 20-25 per cent extra.
Factory dispatches of most consumer goods have nearly come to a halt since late August after Prime Minister Narendra Modi announced the GST revamp on Independence Day, as companies and consumers wait for the new two-slab regime of 5 per cent and 18 per cent , with the 12 per cent and 28 per cent rates having been scrapped. Auto inventory has piled up at yards and warehouses; dealers and buyers are waiting for the new prices, although some manufacturers have already started selling at GST 2.0 rates to move stock.
As for retailers and online sellers, they didn’t want to lock their working capital into GST input credit as rates have dropped under the incoming regime.
Fleet-Footed
Transporters said fleets are going to be stretched. “We do see a huge rush in deliveries across sectors. Companies with their own fleets will fall short, and additional vehicles will need to be procured from the market,” said Balmalkit Singh of Bal RoadLines.
Singh expects freight rates to rise sharply as capacity tightens. A transporter who works with original equipment manufacturers (OEMs) said some are booking additional vehicles and may offer incentives to secure trucks. Logistics companies are also adding capacity TVS Supply Chain Solutions (TVS SCS), which manages 50,000–70,000 trips a month with 4,000 trucks on its network, has signed extra contracts with vendors. “We expect dispatches to spike sharply. Customers with distributed warehouses are pre-stocking, but others will all push out inventory after September 22,” said Sukumar Kameswaran, chief executive, India, Middle East & Africa, at TVS SCS.
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