Mumbai, Nov 8 : With the monsoon withdrawing, consumption recovering, and infrastructure activity picking up, freight rates saw a sequential recovery in October. However, with diesel prices ruling high after a scorching run-up, the overall profitability of transporters remains below levels seen in the closing quarter of last fiscal, ratings agency Crisil has said in a report. CRISFrex or pan-India Crisil freight index captures changes in freight rates on a sequential basis. What makes it first-of-its-kind in India is that it also tracks the free cash flows, or FCF (pre-EMI) of transporters on an ongoing basis. Higher FCF would typically lead to higher demand for commercial vehicles. Over the past 2-3 years, the domestic road freight transportation industry ran into many speed-breakers. The axle load norms caused a discernible drop in fleet utilisation levels in fiscal 2019, while the BS-VI norms led to a 10-15 per cent increase in the prices o f new trucks in fiscal 2020. Then came the Covid-19 pandemic and the sharp economic contraction. In the first quarter of fiscal 2021, fleet utilisation rates plunged with most consumption and demand centres locked down. A sequential recovery was visible with a gradual reopening of the economy over the next three quarters. Amid all this, freight demand recovery was sporadic across segments; FMCG/FM CD recovered faster than discretionary segments such as readymade garments/textiles, and other consumer durables. Even within states, recovery varied based on the pandemic caseload and unlocking levels, the report said: In such scenarios, transporters, logistics service providers, original equipment manufacturers and financers need to know the predicament of freight use rs, taxonomised by sectors, routes, applications and platforms. CRISIL, which has been tracking freight rates and operator cash flows (pre-E MI) across 32 key routes in India on a bi- monthly basis since October 2020, will now deliver the data signals every month. FreightSigns finds consumer essentials such as agri- products and FMCG/FMCD are the most resilient and stable segments driving the trucking industry, even in the current context. In fact, many large fleet operators (35+ tonne GVW) have shifted focus from bulk commodities to lighter applications in the past 2 years. Two, the industry is showing signs of improvement in terms of the freight in dex and EMI serviceability across route-commodity combinations despite a jump in diesel prices. That's because freight rates increased relatively higher compared with the increase in diesel prices over June-October 2021. Furthermore, utilisation in terms of the average monthly running or the number of trips done has also improved across most of the 159 route-commodity combinations tracked by CRISIL. However, despite improvement in the index in October 2021 to 122 (similar to February 2021 levels), the FCF still continues to be at a level (17 per cent) comparable with October 2020. This is one of the key reasons that financiers are still not comfortable in funding small fleet operators. By the third quarter of fiscal 2021, freight rates for cement, steel and auto-carriers had materially improved. The first two segments benefited from the government's infra push, while increase in demand for passenger vehicles fuelled by preference for personal mobility boosted auto-carriers. In February 2021, freight rates peaked with CRISIL Research's CRISFre x touching 123 (October 20200). Parallelly, the spread between freight rates and diesel prices recorded a near-term high resulting in buoyant sentiments for CV sales as well. Replacement demand (from cement and steel segments) also contributed during the quarter. Although the pandemic's second wave led to a sharp correction in freight rates, the impact at an aggregate level was not as severe for truckers as the first lockdown because the restrictions this time were more localised. While the extension of the Emergency Credit Line Guarantee scheme did help some of the organised players tide over liquidity crunch, the smaller fleet operators felt the heat as FCF to EMI ratios tracked by CRISIL at route -- commodity level dropped to new lows in the absence of a moratorium and increase i n input costs. /IANS