Transporters prepare to hand over 50,000 vehicles to lenders

Mumbai, Ta. 18 August 2020, Tuesday

Due to sluggish economic activity, low freight rates and the moratorium closing on August 31, a large number of transporters in the country are planning to hand over their vehicles to their creditors.

According to estimates by the Indian Foundation for Transport Research and Training, transporters are set to deliver about 20,000 vehicles to lenders in the near future.

In August, freight rates fell by 10 per cent compared to July, raising concerns among transporters. The situation is quite bleak.

Some people are planning to reduce trade while some are considering closing down businesses. The situation will worsen after August 31 when the moratorium closes. As the transporters are not in a position to repay the loan, they are preparing to hand over 5,000 to 20,000 vehicles, sources in the foundation said.

When old loans show no signs of repaying, new loans seem difficult to obtain. Loan rejection rates will be much higher. However a company providing vehicle loans claimed the situation was not so serious.

Transporters do not appear to have surrendered their vehicles. This is an air being raised. Financiers will be ready to solve the problem, he added.

The situation is improving as the lockdown eases. Financiers are meeting the requirement of working capital. Meanwhile, it is being speculated that the waiver of road tax exemption from October will also be a matter of concern for truck owners.

Demand is sluggish. Only 30% of transport vehicles are being used. "Most of the transporters are not able to fulfill their responsibilities," said an official of the Bombay Goods Transport Association. Transporters have been able to survive so far because of the moratorium.