Fuel Adjustment Factor: AITWA has decided to implement FAF in freight rates in view of rising fuel costs and global conditions, which will result in a change in freight rates as per diesel prices.

FAF applicable to freight rates

Fuel Adjustment Factor: The All India Transporters' Welfare Association (AITWA), an organization of transporters across the country, has announced the implementation of the Fuel Adjustment Factor (FAF) in freight rates. The organization says that ongoing global tensions and war-like situations have had a profound impact on the international energy market and supply chain, leading to significant increases in the costs of the transport industry.

Rising diesel prices became a major reason.

According to AITWA, diesel prices have risen sharply since May 15, 2026. Crude oil supplies have been disrupted due to restrictions around the Strait of Hormuz and global tensions. Furthermore, the rising pressure on the Indian rupee has significantly increased the cost of crude oil imports. There are also reports of shortages at diesel pumps in many areas, directly impacting truck traffic.

The organization stated that DEF (AdBlue) prices have nearly doubled in the past two months. Tire prices have also risen by approximately five percent. Furthermore, toll fees across the country are also set to increase, effective April 1, 2026. AITWA states that diesel accounts for approximately 65 percent of total transport operating costs, making it necessary to incorporate these increased costs into existing freight contracts.

What is the formula for FAF?

AITWA has established a straightforward formula under the FAF. With the diesel price as of May 15, 2026, as the base, freight rates will increase by 0.65% for every one rupee per liter increase in diesel prices thereafter. The organization has clarified that this FAF is only intended to compensate for increased fuel costs and will not provide any additional profit to transporters.

AITWA has appealed to trade and industry organizations to view this FAF, effective May 20, 2026, not as a normal annual increase but as an extraordinary global cost adjustment. The organization also reminded that road transport is the backbone of India's supply chain, and industry support is crucial during this difficult time.