Freight rates across the country eased in June after transport operators passed on the benefits of excise duty cut on fuel even though various sectors saw a decline in fleet utilisation during the month, a Crisil report said on Thursday.

Crisil’s pan-India freight index CRISFrex indicates that freight rates have dropped month-on-month with free cash flow or pre-equated monthly installment going back to April 2022 level, largely due to a drop in fuel prices, CRSIL said.

CRISFrex captures the changes in freight rates on a sequential basis. Besides, it also tracks the Free Cash Flows (FCF) of transporters on an ongoing basis.

Higher FCF would typically support demand for commercial vehicles.

The transporters had in May partially passed on the benefit of lower fuel prices after finance minister Nirmala Sitharaman on May 21 announced a cut in excise duty on petrol by a record Rs 8 per litre and that on diesel by Rs 6, helping the oil marketing companies lower the prices of the two automobile fuels.

Mining applications (largely coal) saw a flattish movement in freight rates over the past month, it said.

On the other hand, freight rates for agri products, container, cement, petroleum tankers, textiles and steel saw a mid-single-digit decline, as per Crisil.

“However, fleet utilisation also dropped (in June), which took place at a faster rate in agri products, auto carriers, FMCG/FMCD, petroleum tankers and textiles. The remaining segments such as market load, parcel/loose goods, mining (largely coal) and container saw slower decline in utilisation,” Crisil said in the report.

Source: PTI IAS HVA