• Nationwide truck driver strike may paralyze supply chains in India

    18 July 2018

    Background

    Shipping lines and freight forwarders are currently advising customers to prepare for severe supply chain disruption as India’s largest truckers and transport association is expected to embark on a nationwide, indefinite strike from 08:00 local time on Friday, July 20. The strike called by the All India Motors Transporter Congress (AIMTC), an umbrella organization of 3,500 Indian transport associations, appears to be widely supported by numerous transport associations across the country as road haulers in India have faced sharp price increases for diesel and toll fees. Exacerbating this situation are issues transport associations have been facing with regards to the Goods and Services Tax (GST) compliance and e-way bills for intra-state movements of goods. Since January 2018, truckers across India have already staged numerous strike actions, causing disruption to container movements at major ports such as in Mumbai, Kochin and Chennai.

    Supply chain impact

    Due to the large support by transport associations at state and local levels, the strike is likely to go ahead and bring container and cargo pick-ups/deliveries from and to ports and airports to a temporary standstill. In anticipation of the disruption, state authorities have already set up task force committees to ensure the uninterrupted movement of essential commodities. These include food and medicines, which are expected to reduce the impact on food and pharmaceutical supply chains largely relying on air freight shipments. In Tamil Nadu, a state in southern India, lorry agents have reportedly stopped booking consignments for northern Indian states since July 15, while bookings will be stopped for intra-state movements in Tamil Nadu from July 18.

    However, as previous strike actions have been suspended or called off (a previous strike was called off in April 2018) once the government seriously engaged in negotiations with road haulers, it is not unlikely that the strike period may be revised if sufficient guarantees have been given with respect to the truck drivers’ demands. The AIMTC has emphasized that some of its core demands include the reduction of diesel prices, the introduction of a nationwide uniform pricing system and of a quarterly revision process. This could help alleviate the cost pressure on the road freight sector, according to the association.

    Due to the uncertainty of the situation, customers across all sectors shipping cargo from, to or through India’s major ports or airports should expect temporary disruption to their supply chains. Customers may consider expediting or delaying critical shipments to avoid cargo being stuck in-transit and incurring potential demurrage fees. Freight rates may sharply increase due to limited trucking capacity throughout the strike period; freight forwards have been asked to close offices for one day on July 20 in support of the strike. Shipping companies in particular may omit port calls and opt to divert cargo to transshipment ports such as Colombo, Sri Lanka, for onward shipments to final destinations in India once the strike or the resulting congestion have eased.

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