Dynamics of front haul and back haul freight traffic: case of Nagpur

Abstract

The draft national logistics policy was proposed by the Government of India to drive economic growth and business competitiveness of the nation through an efficient, sustainable and cost-effective logistics network by leveraging latest technology, process and skills which, at present, within India are highly unorganized and being neglected. Thus, promising new efficiencies are bound to have an impact on national economy and environmental aspects to which road freight transportation emissions is a major contributor. The draft national logistics policy also puts emphasis on India to integrate and optimize the various elements of its logistics value chain which is the future. Due to the influence in market by difference in location, time and cargo value pricing in transportation becomes complex. Resulting in variation of freight rates between minimum cost of providing the service and maximum value of service provided. Service pricing value is often discussed as "charging what the market will bear" which can also be referred to as demand-based pricing, and can be applied in conditions in which the carrier enjoys a "seller's market". However, sometimes, the carrier experiences a "buyer's market" where the freight rates are decreased by a surplus of vehicle supply. The question that arises then is how much carrier’s costs can be obtained from the market. All services of transportation require the operator with his/her equipment to return to origin for various modes of travel. Unlike passenger travel, freight transport need not be a round-trip always. Usually the direction of trade with a higher demand are taken as the front haul and the one with the lesser volume of trade as the backhaul. The secondary backhaul market-nature is then forcibly taken by the carrier. There are various issues within the trucking industry framework and operations in India, impacting the haulage pattern of truckers and bringing down the efficiency of overall logistics. This study shall further help understand the dynamics of fronthaul and backhaul freight-traffic by studying a set of transport firms and their practices in the selected study area with adequate references from international scenarios and practices. The ultimate aim of the exercise would be to initiate a need for study in the direction of true price discovery of transportation and trucking efficiency.