World Bank Transport Report- Indian Road Transport Service Study

Prepared By: PUNIT CHADHA 500021086 MBA-LSCM III

Road Transport Report

Truck Industry

Inter-city Bus

Motor Insurance Company

TRUCK INDUSTRY
Transporters
Primary contact with suppliers Responsible for cargo loss

Truck Operators
Owners of a small fleet of trucks Contract with transporters for intercity freight

Broker Agent
Provide truck operator to transporter Finds out reliability of truck transporter.

Conti..
Low cost road freight transport. Poor service quality. 60,000-1,00,000 km-Utilization of Indian trucking fleet. 10.2 tons-Indias legal single axle load National highways constructed for 8.16 tons. Rs 550 billion-Annual estimated loss from road accidents. 4%-Modest profit Levels. Rs 9-11- Freight charged per ton/km in 2003. 2-3 axle rigid trucks, small sleeper cab, open top.

Conti..
Low tech trucks with 135-165 hp engine. Not suitable for Just In Time. Badly broken licensing system. Instead of operator, transporter is liable for cargo loss.

TCI
10-15% profit margin. Solicit, bill and collect for freight. Bear cost of bad debts and cargo claims 50-70%-Invest in driver advances. 60 days- Slow accounts receivables.

Recommendations
Employee European TIR, permit sealed trucks, without en-route inspections. Audio-visual driver trainings. Prevent Excessive hours of driving. Improve axle load controls Permanent weight stations Carry 2 licensed drivers. Increase tractor-trailor.

INTERCITY BUS SERVICE

Monopoly with State transport Undertaking(STU) STU controls 45% of fleet. Rs 22 billion- Lost by STU till 2000. Increased Costs
Excessive staff High Per passenger km cost (40%) STU-7 staff per bus and salaryRs7700, Private-4.3 staff per bus and salary Rs3500

Conti
Private buses with contract carriage permit operate as stage carriage. Compete with Jeep, Van that operate freely as stage transport. Now private sector owns 80% of the bus fleet. Reasons for increasing
Excessive staffing. Excessive salary.

Conti
Proposals by ASRTU
Corporatization of STUs Subsidies Compensation for social mandates Cross subsidies among routes.

Recommendations
Deregulations of tariffs. Restructuring and commercialization of STUs. Elimination of STU monopoly rights. Uniformity in tax treatment of all buses. Establish independent agency. Remove quantitative regulations. Redeploy Excessive staff. Allow market forces to decide tariffs.

MOTOR INSURANCE INDUSTRY

Accounts for 40% of general insurance premium, i.e. Rs 60 billion. 50% vehicles not covered. Not performing critical role. Auto and truck liability insurance policies do not have an upper limit liability. Share integrated insurance claim database jointly by Indian insurance market.

Conti
Most accident prone country Accounts for 2% global car fleet, but 7% accidents. Tariff regime discourages state owned companies from engaging in proper screening and underwriting of motor risk.

Conti
Lack of features in legal framework:
No statute of limitations. Liability limits Threshold of claims adjudication Unlimited financial liability for insurers. Few legal defenses for insurers.

RECOMMENDATIONS
Experience rated premium attach to owner and driver but not to vehicle. Develop integrated claim database. Create motor insurance pool for bad drivers who have been denied covers. Amendment of motor vehicle act 1988 Transparent financial reporting Establishing an insurance mutual for motor industry and lower their initial capital requirement..

THANK YOU