Indian road logistics industry is anticipated to witness a steady but restrained growth trajectory in the fiscal year 2025, as projected by the credit rating agency, ICRA. The forecast suggests a modest expansion of revenues within the range of 3-6 percent, primarily attributed to several factors influencing the sector's dynamics.

According to ICRA's analysis, the industry's growth pace is expected to be constrained by several factors. These include the limited capacity of logistics players to adjust freight rates, anticipated softening of government expenditure during the election period due to the Model Code of Conduct obligations and a moderation in consumer demand sentiments owing to elevated levels of inflation and interest rates.

Despite the prevailing challenges, ICRA maintains a stable outlook for the sector. This optimistic stance is underpinned by sustained momentum in economic activities, the increasing traction of organised trade and ongoing support from diverse segments such as e-commerce, FMCG, retail, pharmaceuticals and industrial goods.

An indication of the resilience within the sector is evidenced by the performance metrics of e-way bills and FASTag volumes. E-way monthly volumes have remained robust, hovering above 85 million for the past four months. Although slightly below the all-time high of 100 million recorded in October 2023, this sustained level signifies resilient domestic trade and transportation activities.

Similarly, the monthly FASTag volumes have mirrored the trends observed in e-way bills. Ranging from 295 to 350 million in the current fiscal year, with a peak of 348 million in December 2023, the figures reflect the continuity of business operations despite market fluctuations and external uncertainties.

Commenting on the same, Vice President and Sector Head – Corporate Ratings, ICRA Limited, Suprio Banerjee, said: “ICRA’s sample set witnessed a modest revenue growth of 2.3% in 9M FY2024 on a YoY basis amidst tapering demand due to high inflation, an uneven monsoon, a high interest rate regime and relatively muted festive season. Thus, on an elevated base of FY2023, ICRA estimates a low single digit growth of 2-5 percent in FY2024.  The growth for road logistics sector in FY2025 is expected to be in the range of 3-6 percent, owing to the impact on demand from high inflation, high interest rate regime and soft (though improving) consumer sentiment.”

“The industry operating profit margin contracted to 11.2 percent in 9M FY2024 on account of increase in operating costs (ex-fuel) due to the high inflationary regime and pressure on realisations, given the sticky retail diesel rates, limiting any formula-driven price rise. ICRA expects the margins to remain in the range of 10.5-12.5 percent in FY2024 and FY2025 over 12.4 percent in FY2023 amidst inflationary headwinds and despite benefits of efficiency gains due to increasing digitalisation and value-added service offerings of industry players. Key debt metrics like OPBITDA is expected to have moderated marginally to 1.5-1.7 times in FY2024 from 1.4 times in FY2023 with rising operating costs (ex-fuel), given the persistently high inflation levels and increase in debt due to debt-funded capital expenditure for new vehicles and anticipated rise in lease liabilities due to expanding branch network and technology investments,” he added. 

He also informed, “Additionally, road logistics players also remain exposed to environmental and social risks. Tightening emission control norms necessitate alternative fuel vehicle investments or investments in the current fleet. They are also exposed to litigation or penalties arising from issues related to harmful emissions and waste, which may lead to financial implications and impact reputation. The social risk includes driver shortage, health, safety and quality of work-life balance for drivers.”

While the Indian road logistics industry faces challenges such as constrained pricing abilities and economic uncertainties, it continues to exhibit resilience and stability. The sector's ability to adapt to changing circumstances and sustain operational momentum underscores its significance within the broader economic landscape. 

As the fiscal year progresses, stakeholders will closely monitor developments, seeking opportunities to navigate challenges and capitalise on emerging trends.

Ashok Leyland, the Indian flagship of the Hinduja Group and the country’s leading commercial vehicle manufacturer, has opened a new dealership for light commercial vehicles (LCVs) in Siliguri, West Bengal. With this new facility, which happens to be the fifth LCV dealership in West Bengal, the company now has a robust LCV distribution network with more than 800 touchpoints.

Located at Eastern Bypass Road, SBM Warehouse, Eastern Bypass, Bhaktinagar, Siliguri, Jalpaiguri, West Bengal, the new dealership will be managed by channel partner Happie Trucking. The main workshop facility (service and spares) is also strategically located at Debgram, Ware House, Thakur Nagar, New Jalpaiguri, Jalpaiguri, West Bengal. Equipped with advanced tools, quick service bays and sophisticated infrastructure, the facility is all set to ensure superior customer experience.

Viplav Shah, Head – LCV Business, Ashok Leyland, said, “We are excited to further strengthen our presence in this region. West Bengal and Eastern India, at large, have been a key market for us. We have always recognised the potential this region has, and we are excited about the opportunities that lie ahead in this geography. We have been working on creating a strong foothold in the region, and the new dealership in Siliguri will bolster our presence in this geography. The overwhelming success of our ‘DOST Range’ and now the ‘BADA DOST’ can be attributed to the robustness of our products and the extensive reach of our network. All our products have been receiving great responses from our customers, thanks to their best-in-class mileage and class-leading performance, backed by extensive sales and aftersales support. We are extremely proud that our track record of service retention levels is exemplary, with close to 70 percent of our customers returning to our dealer workshops even after the warranty period. We, as always, would remain committed to maintaining and even enhancing the level of customer service and satisfaction. This new dealership is being opened to further strengthen our reach, in line with our commitment.”

VE Commercial Vehicles (VECV), recently hosted Jan Thesleff, the Ambassador of Sweden to India, at its manufacturing facilities in Pithampur. He was accompanied by Markus Lundgren, Counsellor and Head of Trade section, Embassy of Sweden and Sofia Hogman, Swedish Trade Commissioner, Business Sweden.

The CV maker states that its VE Powertrain plant is a successful symbol of India-Sweden collaboration. The facility leverages India’s skilled workforce and technical expertise while positioning VECV as a hub for development and manufacturing that meets global standards. Notably, VEPT has been producing Euro 6 (BS VI) compliant engines since 2013, supplying over 40 countries.

Jan Thesleff said, “Currently, more than 280 Swedish companies operate in India, contributing to sectors ranging from automobiles and communications to healthcare and defence, directly generating over 240,000 jobs. The Eicher-Volvo joint venture exemplifies the strategic benefits of this partnership by harnessing the strengths of Sweden and India and fostering mutual growth and technological advancement. I am thoroughly impressed by the advanced technology products and sustainable manufacturing processes I witnessed today at VECV. Their remarkable achievements epitomise the shared innovation, growth, and sustainable development that Sweden-India partnership continues to deliver for the benefit of both nations.”

Vinod Aggarwal, Managing Director & CEO, VECV, said, “We are honoured to welcome His Excellency Ambassador Jan Thesleff and the team from the Swedish Embassy to our Pithampur facility. Over the past 16 years, the VECV joint venture has not only driven the modernisation of India’s commercial vehicle sector but has also enabled Volvo Group to source world-class engines and components, made in India, for its global requirements. The success of this joint venture is rooted in the principles of trust, mutual respect, and win-win collaboration, combining Volvo Group's technology leadership with Eicher’s deep understanding of the Indian market. VECV looks forward to building on this success in the future”.

At present, the company sells CNG, LNG, electric and diesel trucks and buses in India under the Eicher and Volvo brands.

Manba Finance, a leading non-banking finance company (NBFC), has signed a Memorandum of Understanding (MoU) with Piaggio Vehicles (PVPL), the wholly-owned subsidiary of the Piaggio Group, to provide tailored financing solutions to Piaggio three-wheeler customers.

As per the understanding, the partners are set to form a dedicated central coordination team to oversee the implementation. They will focus on key areas such as product structuring, interest rate optimisation, resource allocation, centralised communication, and training to ensure the efficient execution and monitoring of the tie-up.

The MoU was signed by Diego Graffi, CMD, Piaggio Vehicles and Monil Shah, CBO & Director, Manba Finance, in the presence of Amit Sagar, EVP of Sales and Retail Finance, and Nilesh Arya, Head of Retail Finance, Piaggio Vehicles.

The partners state that the collaboration comes as electric three-wheeler sales saw a record high of 65,700 units in October. With this electric three-wheelers are just 16,856 units away from surpassing the CY2023 total of 583,597 units.

“We are proud to collaborate with one of India’s leading three-wheeler manufacturers, a trusted brand among aspiring entrepreneurs across the country. This partnership strengthens our footprint in the three-wheeler segment while enabling us to provide seamless digital lending solutions to our customers," said Shah.

German automotive component supplier Mahle has bagged a new contract from MAN Truck & Bus to supply components for the hydrogen engine of its ‘MAN hTGX’ truck.

The hydrogen truck uses a direct-injection engine with 6 cylinders, 16.8-litre displacement, which produces 383 kW power. Mahle will supply the hydrogen power cell unit, consisting of piston, piston rings, piston pin and cylinder liner. It will also supply components to be used in the valve train.

Interestingly, MAN aims to build around 200 units of the hydrogen truck for selected markets from 2025.

Dr Roger Busch, member of the Mahle Management Committee and Head of Sales, said, “Mahle has successfully transferred its 100 years of expertise in engine components into the future. Our state-of-the-art pistons and other parts make the internal combustion engine fit for hydrogen and thus climate-neutral. Today, we are able to fulfil our customers’ expectations in terms of performance, efficiency and service life.”

The component supplier says it has successfully tested its engine components to meet the specific requirements of hydrogen operation.

The company claims that the Mahle hydrogen power cell unit, in particular the oil consumption of the motor and the so-called blow-by, i.e. the leakage of hydrogen gas into the crankcase, can be reduced to a minimum. This enables a robust and failure-free operation of the motor.

Mahle at present is working on around 30 hydrogen engine projects for customers in the on- and off-highway sector, with more series launches from its customers being planned in 2025.