Dilapidated Fleet Main Challenge Facing Trucking Industry

EghtesadOnline: Critical issues facing private sector players of trucking industry are mostly structural and existed even before the outbreak of Covid-19.

News ID: ۷۵۱۵۶۲

24 November 2020

According to Iranian entrepreneur Fatemeh Moqimi, the new coronavirus crisis did harm trade after the closure of borders and decrease in goods transportation by trucks, but it pales in comparison with other problems that beset the industry.

“These issues are divided into two groups: domestic and foreign. International challenges have emerged in the aftermath of the new coronavirus. They have affected other countries as well. However, domestic problems are the industry’s decades-long legacy; they have gone unheeded and unsolved and it seems that so far, there has been no desire to deal with them,” she was quoted as saying by the news portal of the Ministry of Roads and Urban Development.

“The country’s aging road fleet and scarcity of heavy duty vehicles is the major domestic problem of the industry. It was very difficult for people to buy new trucks from foreign countries even in the past. Most trucks of Iran’s road fleet have a lifespan of more than 20 years; they are aged and not permitted to ply on international roads. They are not only prone to crash, but also cause environmental hazards and noise pollution.”

Out of 387,000 heavy-duty vehicles in the country’s road fleet, nearly 52,000 are above 40 years old and 5,000 are over 50 years old, consuming 60 liters of diesel per 100 kilometers, which could be reduced to 35-40 liters if repaired. Given the old trucks’ long use, they consume hundreds of thousands of liters of more fuel than the standard consumption level.

However, since the fiscal year ending March 2000, only 20,000 old trucks have been replaced by new ones, the Persian daily Shargh reported.

Restrictions on imports and prohibitive prices have made it difficult to meet market demand for heavy vehicles. On top of that, lack of financial facilities also prevents truck drivers from buying new vehicles.

Referring to the depreciation of the rial against foreign currencies, Moqimi, who is also a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture, said, “How can a driver invest 20-30 billion rials [$77,220-115830] in buying a new truck and be sure of the final value of their investment? Here the sum of initial investment is not the only factor, the trucker’s life and experience, the hours he puts in, are deciding factors as well. Service fees of freight transport and current costs are disproportionate. Apart from dedication, economic feasibility is an important factor for people to get involved in the occupation. It’s not even clear that what forex exchange rate is the currency conversion rate when someone intends to buy a heavy-duty vehicle.”

The entrepreneur noted that the owner-operator system is another problem of trucking industry.

“Each trucker is the owner of his own vehicle in Iran. They have to carry out all stages of freight transportation. In fact, lack of leading transportation companies has created problems for both truckers and those who place an order for delivery. Some truckers refuse to carry shipment, whereas in the presence of transportation companies, they would not shirk their responsibilities,” she said.

“Had the Ministry of Roads and Urban Development supported transportation companies and allowed them to buy 10-20 trucks, many of these problems would not have arisen.”

Asked whether railroads would be able to replace road transportation, Moqimi said a number of rail development projects have been left unfinished.

“On the other hand, due to lack of demand for rail transportation, private sector companies that have invested in this business suffered mounting losses. Rail transportation industry has yet to reach its potential,” she said.

“Customs clearance procedures are very strict at sea ports. Several dry ports have been established, which execute even more stringent regulations. I believe dry ports are among the country’s unfinished projects, problems of which need to be addressed.”

Moqi also said the government should facilitate all trade affairs, in the year of “Surge in Production”, by putting an end to cumbersome procedures and regulations that are at times contradictory.

“There should be harmony between rules and practices as well as bylaws and directives issued by local organizations,” she concluded.