June 19, 2024
Commercial Vehicles

Rise Of Commercial Vehicles Play A Crucial Role In Facilitating Transportation

Introduction
Commercial vehicles play a crucial role in facilitating transportation and logistics for industries across various sectors of the economy. Be it delivering goods to customers or transporting raw materials within a supply chain, commercial vehicles form the backbone of business operations. In recent years, their usage has increased significantly owing to growing e-commerce, rising demand for fast delivery of goods, and expansion of industries across sectors.

Types of Commercial Vehicles
Commercial vehicles come in various types depending on their size and load carrying capacity. Some of the main types are:

Light Commercial Vehicles
Light commercial vehicles (LCVs) include vans, pickup trucks and mini trucks that can carry loads up to 3.5 tons. These versatile vehicles are commonly used for local delivery of packages, transporting small shipments within cities, and servicing customer locations. Their compact size allows for easy maneuvering in urban traffic and accessing locations with limited space for large vehicles.

Medium Commercial Vehicles
Medium commercial vehicles (MCVs) have higher payloads between 3.5-7.5 tons. Various types of MCVs include trucks, lorries and small buses used for transportation of various goods over short to medium distances. They are suitable for intra-city and inter-city transportation requirements. MCVs form the backbone of fleet operations for industries and logistics companies.

Heavy Commercial Vehicles
Heavy commercial vehicles (HCVs) have payloads exceeding 16 tons. These big trucks are used for transportation of bulk cargo and construction materials over long distances. Tankers, trailers, dumpers and haulage trucks fall under the HCV category that facilitates movement of large volumes of goods across regions.

Rise in E-commerce Drives Commercial Vehicle Demand
The exponential growth of the e-commerce industry has significantly boosted demand for commercial vehicles across segments. The need for last-mile delivery of packages to customers on time has led to a surge in procurement of efficient LCVs and vans by e-commerce companies. They rely on commercial fleets to manage throughput and ensure swift dispatch of orders from warehouses.

In addition, growing penetration of online grocery and food delivery services has increased transportation requirements. Companies operating in these sectors heavily depend on Commercial Vehicles especially two & three-wheelers, to meet delivery timelines. Reports suggest e-commerce contributed around 25% growth in commercial vehicle sales over the past three years alone.

Growing Cluster of Industries Spurs Logistics Activity
Strong economic growth has enabled expansion of important industries like manufacturing, construction, agriculture, FMCG and pharmaceuticals across India. This proliferation of industries across regions has boosted associated logistics activities within supply chains.

Regular transportation of raw materials, machinery equipment and finished goods between production units, warehouses and customer locations has increased manifold. Commercial fleets managed by logistics service providers play a pivotal role in effective movement of cargo. The diverse transportation needs of industries ranging from local to long-haul assignments have driven uptake of all categories of commercial vehicles.

Rise of Organized Retail Accelerates Demand
India has witnessed robust growth of organized retail sector over the past decade led by expansion of supermarket and hypermarket chains. These retail majors source a wide variety of products from different regions to maintain stock levels across multiple stores.

Transportation of shipments from manufacturing units to centralized distribution centres and further dispatch to store locations involves extensive use of commercial vehicles. Additionally, just-in-time replenishment of inventory through frequent smaller deliveries adds to miles covered. The sector therefore contributes strongly to growth of LCVs, MCVs and HCVs for transporting retail goods regularly.

Government Policy Support Boosts Growth
The government has rolled out favourable policies to encourage commercial transportation and boost Make-in-India. Various initiatives like GST implementation streamlining registration and tolling have facilitated cross-border movement of trucks. On the operational front, initiatives like electronic toll collection have enhanced efficiency.

Furthermore, production-linked incentives for auto components have bolstered local component manufacturing, making fleet operations more cost-effective. Focus on developing road infrastructure including highways, expressways and multi-modal logistics parks augments transportation capacity further. Collectively, these policy strengthens have encouraged organized commercial logistics fuelling demand for fleet expansion.

Infrastructure projects in areas like power, mining, real estate, cement also create direct demand for transportation through their purchasing, sourcing and distribution activities. Hence, pickup in construction work indirectly aids HCV sales.

Future Outlook
A burgeoning warehousing sector housing fulfillment centres of e-commerce and other industries is expected to increase requirements of transportation connectivity. Growth of cold chain logistics spurred by food delivery and pharma sectors will aid demand for temperature-controlled transportation.

Favorable demographic and economic trends point towards sustained industrial output in coming years leading to greater logistics activity. Greenfield industrial regions and manufacturing clusters will necessitate associated transportation linkages through commercial fleets run on electric, CNG and other cleaner fuels. Overall, analysts forecast the vibrant commercial vehicle in India to witness annual expansion in high single digits over next 5 years.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it