New axle load regime likely to fuel inflation

KARACHI: Amid divergent reactions to the implementation of the new Axle Load Regime (ALR) from goods movers, manufacturers believe this will result in a price hike for various items including essential commodities, thus pushing up the cost of living of already inflation-hit consumers.

A cement maker said that Punjab-based cement makers have raised prices by Rs50 per 50 kg bag while prices in the southern zone are expected to be raised by Rs30-40 per bag in case the ALR comes into force.

DG Khan Cement in a corporate briefing on Thursday informed Topline Securities that a jump of Rs14-15 in cement bag prices is likely following the implementation of ALR while any further axle load would be passed on to the consumers.

Maximum retail prices in North and South are Rs1,260 and Rs1,100 per 50kg bag, respectively, while inland freight from Karachi to Kallar Kahar has surged to Rs12,000 per tonne from Rs8,500 due to implementation of ALR.

Pioneer Cement Company Ltd has also increased the prices by 6.4pc to Rs1,250 per bag from Rs1,175 as a result of axle load impact.

In the last week of October, the Sindh High Court (SHC) suspended a notification issued by the National Highway Authority (NHA) banning loads of articles beyond the axle load limit till Nov 16 whose next hearing date has been extended to Dec 5.

A lawsuit was filed by the Pakistan Flour Mills Association (PFMA) and 12 others impugning the NHA notification issued on Oct 12.

PFMA Chairman Sindh Zone Aamir Abdullah said in case the axle load regime comes into force then the price of wheat would rise by at least Rs3 per kg.

All Pakistan Solvent Extractors’ Association (APSEA) Chairman Mian Mohammad Ahmed projects an increase of Rs12-14 per kg in edible oil prices and Rs8-10 per kg in chicken prices due to a twofold increase in the cost of freight charges for oil seeds and meal.

The government faces a potential surge in terms of foreign exchange in fuel costs if it persists with its ALR on motorways and highways.

APSEA chief said load cut substantially diminishes the lifting capacity of each truck (by 40pc on 22-wheelers and 100pc on 10-wheelers) which would lead to a 50-60pc surge in freight prices.

The implications of this surge in fuel costs are profound, particularly in the context of the edible oil extraction industry.

He warned that the reduction in truck lifting capacity would result in a substantial increase in freight expenses, representing a significant portion of total import costs.

Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) Executive Director Sher Shah Malik said the price of fertiliser has not been increased yet. “We are looking forward to the proposal for the gradual application of ALR. If the government considers it seriously, it will save the farmers. The bigger worry is the shortage of transport for urea transportation.

The axle load regime has led to severe shortages of transport thereby causing disruption of the supply chain of fertiliser in peak periods. While recommending implementing axle load in phases, he said, the first phase should be adopted from January 2024, for a period of one to two years.

After this first phase, each subsequent phase should be synchronised with a National Five-Year Plan, he added.

He was of the view that an initial relaxation of 50pc (without any penalty) of the maximum load for each category of vehicles should be promulgated for 2024 as an interim arrangement, with further phases gradually lowering this relaxation to 15pc, which is currently allowed by law without the risk of penalties.

Pakistan Association of Large Steel Producers (PALSP) General Secretary Wajid Bukhari expects a rise of Rs3,000-5,000 per tonne in steel bar prices depending on the distance of goods transportation in the country.

All Pakistan Goods Transport Owners Association (APGTOA) Senior Vice Chairman Imdad Hussain Naqvi said load axle implementation has nothing to do with the price increase of various items.

“Exchange rate, hoarding, speculative trading, profiteering and ineffective price checking campaigns are mainly responsible for the price hike,” he said.

“Manufacturers mainly force us for haulage of excess load like putting the load of three vehicles on a single carrier, which is unjustified and damages roads and infrastructure,” he disclosed.