Diesel Price Shock, Fuel Shortage and Delays: AITWA Introduces Fuel Adjustment Factor in Freight Rates

Moneylife Digital Team 21 May 2026

Economy & Nation

While urging trade and industry not to penalise transporters for delays and disruptions, the All India Transporters Welfare Association (AITWA) has issued an urgent advisory warning of widespread disruption in truck movement across the country due to sharp increases in diesel prices, fuel shortages and mounting operational costs.

To address the rising fuel burden, AITWA announced the introduction of a fuel adjustment factor (FAF) from 20 May 2026. The mechanism proposes a 0.65% increase in freight rates for every ₹1 increase in diesel prices above the base rate prevailing on 15 May 2026.

In a circular issued on 19 May 2026, following its general meeting held on 16 May 2026, AITWA says the road transport industry is facing 'extraordinary global circumstances' that are placing unprecedented pressure on fleet operators and logistics businesses.

AITWA general secretary Abhishek Gupta says the Association had held multiple meetings over the past few days to discuss the worsening ground situation affecting the smooth movement of goods by trucks across the country.

According to him, fleet-owners have so far absorbed the rising costs, but warned that unless transporters are suitably compensated, many could begin defaulting on loans and eventually shut down operations.

“We request wide circulation of this information for all to know the real position,” Mr Gupta says.

In its advisory, AITWA attributed the sharp escalation in diesel prices to ongoing global war conditions disrupting international energy markets and trade routes, restrictions around the Strait of Hormuz affecting crude supplies, and pressure on the Indian rupee, which has increased the cost of crude imports.

The Association says several additional operational costs have also increased sharply in recent weeks. These include diesel shortages at fuel stations leading to delays in truck operations, a near doubling of diesel exhaust fluid (DEF/AdBlue) over the last two months, a nearly 5% rise in tyre prices and increased toll charges implemented from 1 April 2026.

AITWA further noted that other factors, such as mandatory vehicle location tracking device (VLTD) requirements and reduced industrial production in several regions, are also affecting truck movement and causing delays.

The Association has urged industries, manufacturers and freight users not to impose penalties on transporters for delays arising from the current disruptions.

According to the circular, diesel accounts for about 65% of truck operating costs, making fuel price volatility a major threat to the sustainability of transport operations.

AITWA clarified that the FAF is not intended to generate additional profits for transporters, but is purely a fuel-cost recovery mechanism linked directly to diesel prices. The Association stated that the adjustment would also be reduced if diesel prices moderate in the future.

The transport body says the current crisis falls outside the scope of standard annual freight revisions and requires an immediate and structured response from all stakeholders.

“We therefore request all users of transport services to accept the fuel adjustment factor effective 20 May 2026, treat this as an extraordinary global cost adjustment and continue supporting the transport sector during this period of global uncertainty,” the circular stated.

AITWA described the road transport industry as the backbone of India’s supply chain and warned that continued financial stress on transporters could have wider implications for trade and commerce if corrective measures are not implemented quickly.

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