- Issues related to infrastructure and roadways.
National Freight Index
What to study?
For prelims and mains: key features, need for and significance of NFI.
Context: In its bid to bring transparency in the road-freight marketplace, Gurgaon-based tech-enabled logistics start-up Rivigo has launched National Freight Index (NFI) that will provide live freight rates for different lanes and vehicles across the country.
- This first-of-its-kind barometer of the road freight market in India is based on a Rivigo rate exchange.
- NFI gives a live spot rate on over 7 million lane and vehicle type combinations in the country.
- NFI offers an aggregated picture of both live rates and historical trends of spot price movements in the road freight industry.
- The index is represented in two main forms: In terms of actual freight rates condensed to INR per ton-km and in terms of relative movement with respect to a base month.
- Both the index and the exchange are based on Rivigo’s machine learning and economics powered pricing algorithms, which are continuously improving on accuracy.
- The rates on the exchange and index are computed using millions of data points from historical transactions, current market dynamics, micro market insights and other factors – with the ultimate purpose of giving a fair and precise representation of the state of the spot market in the country.
Significance and the need for NFI:
- In the existing logistics market structure, there are high inefficiencies due to information asymmetry, which leads to a great loss of value.
- NFI will enable unrestricted access and sharing of freight rate information. This will bring transparency in the market and propel the logistics sector towards efficiencies and growth.
The Indian road freight market for 2018 is estimated to be in the range of USD 150-160 billion. About USD 130-140 billion of this is the Full Truck Load (FTL) market. Within this, Rivigo estimates that the spot freight market is about USD 110-130 billion and is growing at 9%-10% per year.
Sources: the Hindu.