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January 03, 2022

FreightSigns

What is the goods traffic, and the free cash flow of fleet operators, telling us?

Freight rates flat in line with diesel; utilisation up

 

Freight rates were unchanged on-quarter in January 2022, tracking largely flat diesel prices. The close correlation of freight rates with diesel prices is because the fuel contributes 50-60% of the input cost of transport operators.

 

Utlisation levels improved on-quarter for bulk goods such as mining (driven by coal and iron ore mine dispatches) as well as for industrial goods such as cement and steel driven by revival of construction activities. However, for consumption goods, utilisation was range-bound due to the rapid spread of Covid-19 infections.

Decadal capex cycle

While there was a marginal uptick in freight rates on most routes, aggregated increase in rates was less than 1% on-quarter. Also, there was no change in freight rates on 10-15% of the routes.

Decadal capex cycle

CRISFrex captures changes in freight rates in India on a sequential basis. It also tracks free cash flow (FCF; preequated monthly instalment) of transporters on an ongoing basis, making it the first of its kind. Higher FCF typically translates to higher demand for commercial vehicles.

Decadal capex cycle
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