A report released this week evaluates the impact of higher diesel prices on India’s road freight transport sector.
Published by the International Institute for Sustainable Development (IISD) and Integrated Research and Action for Development (IRADe), the report finds that the trucking industry is vulnerable to higher fuel costs, and supports the earlier evidence that the fuel costs account for around 55 per cent of their total operating costs.
However, the main finding of the study is that the industry’s weakness is primarily grounded in structural constraints that have squeezed profit margins, while providing truckers with little leverage to pass on higher costs to clients. The study suggests that addressing these constraints—more so than subsidizing the cost of fuel—is the solution to the long-term profitability of the industry.
The Impacts of India’s Diesel Price Reforms on the Trucking Industry is available at http://www.iisd.org/gsi/sites/default/files/ffs_india_irade_trucking.pdf