Iran Roads Ministry Changes Transport Rental Rate Formula For Allaying Truckers' Concerns

EghtesadOnline: The High Council of Transportation announced on Saturday that truck rental rates for domestic cargo will be calculated on a ton-kilometer (tkm) basis.

News ID: ۷۸۴۱۸۸

14 October 2018

Faramarz Maddah, a board member at the Road Maintenance and Transportation Organization of Iran, said the new calculation formula increases the average rental rates compared with the previous method whereby the rates were arbitrarily agreed upon between truckers and cargo owners or transportation companies, the Ministry of Roads and Urban Development reported on its website.

A number of Iranian truckers went on strike in late May, partially blocking roadways by parking their vehicles along main roads.

Setting new rental rates per ton-kilometer by taking into account fuel consumption, route profile, tire depreciation, driver’s salary, insurance and high road risk was the main demand put forward by the representatives of truckers in their meeting with the roads minister, Financial Tribune reported.

Since then, the ministry has been working with RMTO and other bodies to devise the new formula for truck rental fees. Many factors had to be taken into account, including the type of fleet, fuel consumption, fixed and variable expenses, distance covered and whether a truck is loaded or empty while commuting, to name a few.

The time-consuming process finally bore fruit on Saturday, which helps remedy one of the main concerns of domestic truckers.

Back in May, Minister of Roads and Urban Development Abbas Akhoundi said in a five-hour-long meeting with Ahmad Karimi, the secretary of Truckers Guild Association, that he believes in the right to protest and that the protest by truck drivers was their legal right and not an unsettling experience.

“I personally disapprove of the government’s engagement in pricing but there should be a criterion for determining the rental rates that can be worked out to build consensus among truckers and the government,” he said.

Karimi said truckers have a whole slew of unsolved problems piled up over the past few years, which would definitely not go away overnight.

Effective supervision over transport companies was another demand made by truckers in their meeting with the minister.

Akhoundi called for the creation of a joint taskforce that will work to fix problems associated with insurance, such as retirement on a minimum-wage salary and removal of government subsidies on their insurance, as well as tax issues troubling the truckers “despite the fact that this issue comes within the purview of Social Security Organization”.

The minister also signaled his ministry's readiness to support the import of truck parts by drivers themselves to help curtail the rising costs of maintenance.

The issue of spare parts was another main concern voiced by truckers amid recent trade restrictions put in place in the wake of a currency crisis facing the Islamic Republic, leading to shortage of foreign exchange and spiking costs.

At the end of the meeting, representatives of truck drivers were promised a 20% increase in rental rates in all provinces.

> Status Quo

According to the latest available data, there are 359,700 active heavy-duty vehicles in Iran’s cargo truck fleet. Over 125,000 (34%) are over 15 years old and almost 1,500 trucks have been active for the past five decades.

The Ministry of Industries, Mining and Trade estimates that about 140,000 commercial vehicles need to be replaced in the coming years–close to 56,000 of them in the next three to five years alone.

Trilateral deals have been reached between the Roads Ministry, Iran Road Maintenance and Transportation Organization and the Iranian Fuel Conservation Company to renovate the dilapidated inter- and intra-city transport fleet.

SAIPA Diesel, Mammut Diesel and other smaller local enterprises are to contribute to the schemes.

While the interest rate on the loans is relatively low (about 9%), the trucks are still not affordable for many, which is another concern voiced by the protesting truck drivers.

Truck drivers agreed to end their strike on May 28 following a deal made between the representatives of Truckers Guild Association and government officials.

However, due to the government’s delay in delivering some of its promises, including setting the new rental rates, truckers have staged sporadic protests here and there in different parts of the country.

Hopefully, the new regulation will put an end to their longstanding discontent.