Bringing Competitive Efficiency Through Trucking Co-operatives: A Case of Road Freight Transportation Industry in India

Abstract

Competitive market always has better consumer surplus provided that competition amongst the players is healthy i.e. firms or entities in a particular market is capable enough to compete. By bringing efficiency amongst unhealthy segment of the market from competition perspective, economy in general and respective segment in particular may have maximum gain. This simply reflect the condition of small truck operators and their operation condition when they compete with fleet operators in market for their business with help of one or two truck primarily. Given the small size they are not operating with economies of scale and hence viability along with other problems is a major issue. Therefore, bringing efficiency in operation of small operators for better competition is necessary, and this can be done through set – up of “Trucking Co-operatives” throughout the country.

Since trucking industry is backbone of our economy and hence viability of small operators is necessary because they comprise around 70% of the total trucking population. It is necessity now to do something to save small truck operators and further enhance their competitiveness in market. Primarily cooperatives being set-up by people who have less and insufficient resources, hence with limited resources they come together for maximum gain i.e. if small operators with insufficient resources come together to form trucking co-operatives, they may achieve viability through cost sharing and cooperative efforts with reference to co-operative marketing. Moreover, by addressing problems and challenges relating to trucking business of small operators we can make them more competitive and help them to sustain in the market. Because given the importance and role played by trucking industry, it is assumed that any kind of inefficiency in this segment leads to huge loss to our economy as suggested by some of the earlier studies too.

Thus, in this paper an attempt has been made to understand the trucking industry in India and to examine operations related issues which effects operational efficiency that ultimately effect the viability, particularly of small truck operators. Also, the aim is to look at various efforts done in past in our economy for the betterment of small operators via cooperative framework and analyze result so far. Moreover, the study undertaken will also attempt to understand the possible benefits that trucking industry in general and small operators in particular can derive through trucking cooperatives via cooperative marketing and can possibly solve many of its existing problems.