Fuel cost varies based on trade lane, vessel type, speed, capacity, and the underlying price of fuel. In canals, which generally have no current, this parameter can be discounted. New Bunker Adjustment Factor (BAF) From 1st January 2020, a new regulation will come into force to reduce air pollution from ships globally. fuel price; distance and; size and weight of the container; In the individual calculation of the fuel surcharge. BAF is an abbreviation of the Bunker Adjustment Factor. We have used Bunkerworld’s fuel price index for 0.5% Sulphur fuel oil (VLSFO) for the BAF calculation and the average bunker price used is 323,87 USD/TON. As speed increases, energy consumption rises disproportionately (by a factor of 3 - 4). For the actual fuel consumption of an inland barge, however, various other factors come into play as well as the purchase price of gasoil: In theory it would be possible to include all these factors individually in calculations for each transported container, but in practice this would overcomplicated and very time-consuming. As bunker fuel prices are quite volatile, the shipping lines charge a fee called "Bunker Adjustment Factor (BAF)" to cover the … The European Commission banned Carrier Conferences as of October 17, 2008. We have used Bunkerworld’s fuel price index for 0.5% Sulphur fuel oil (VLSFO) for the BAF calculation, and the average bunker price used is 271.24 USD/TON. There is a direct and simple corrrespondence between the distance travelled and the fuel consumption. To capture accurate marine transport fuel costs, shippers and carriers need to establish a transparent baseline that aligns with the consumption and cost of fuel needed to move a unit of shipper’s cargo from origin to destination. We have used Bunkerworld’s fuel price index for 0.5% Sulphur fuel oil (VLSFO) for the BAF calculation, and the average bunker price used is 313.31 USD/TON. The shipping lines now set their own independent BAF rates. Overall, Hapag-Lloyd says the bunker adjustment factor (BAF) aims for ‘transparent calculation of costs’. One determinant is distance. why they are used or whether they continue to fit It applies to contracts with validity longer than 3 months. Upstream the barge has to work against the current and needs considerably more time, and therefore more fuel, to cover the same distance than when navigating the same stretch downstream. Sealand – A Maersk Company has reviewed its Bunker Adjustment Factor (BAF), and the new tariffs will be effective 1 July 2020. Global maritime fuel markets are becoming more complex. The purchase price per 100 litres of gasoil regularly ascertained by the CBRB in a market survey forms the basis for all carriers’ calculations when determining fuel surcharges. To ensure that our price structuring stays fair, we pass on the current prices to the customer in the form of a fuel surcharge. AKA Bunker Surcharge. Also called ‘Fuel Adjustment Factor’ or ‘Bunker Surcharge’, BAF represents the floating part of sea freight charges to adjust the volatility of the fuel prices. Whereas today ships can use fuel with up to 3.5% sulphur content (outside Emission Control Areas), the new global sulphur cap will be 0.5%. All rights reserved. Oil Prices and Bunker Adjustment Factor Surcharges. The price ascertained by the CBRB is the basic index for price calculations. * The details on One major emerging challenge is the long-standing inconsistency in BAF practices. Maersk Line said in a statement in Mumbai that it has introduced a new formula for floating BAF (Bunker Adjustment Factor). Every car driver is familiar with fluctuating prices of petrol. In order to ensure the sustainability & reliability of our services in this volatile environment, CMA CGM will introduce a new quarterly Bunker Adjustment Formula (BAF) for long term contracts starting from 1st of January 2019. The cost of bunker oil fluctuates continually and with comparatively little warning. The term "Bunker" refers to the fuel that is used to operate ships. Bunker Adjustment Factor (BAF) Q1 2021 Dear customer, Hamburg Süd would like to inform you about the revision of our Bunker Adjustment Factor (BAF) Surcharge for Q1 2021. BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route.. In 2019, we have used the fuel price for high-sulphur fuel (3.5% sulphur) to calculate the BAF. The result is the "Bunker Adjustment Factor" (BAF) or bunker charge. Accordingly, Safmarine will apply the additional monthly trigger defined in our Bunker Adjustment Factor (BAF) and Environmental Fuel Fee (EFF) formulas and the new tariffs will be effective 1 March 2020. One important aspect is the continuous optimisation of all processes, most importantly by the use of intelligent software systems. These prices constitute a significant percentage of the total cost of transporting goods. Matt has a Master’s in Economics and is our internal subject matter expert on international fuel markets. And conditions in the watercourse (water level, draft, channel width) play a much greater role for inland barges than they do for seagoing vessels. The ship operator is responsible for the payment of these bunkers to the bunker supplier. One institution that finds acceptance throughout the transport sector is the Centraal Bureau voor ee Rijn- en Binnenvaart (CBRB) in the Netherlands. The rates are listed below for your convenience (the data refers to ZIM’s base ports in each trade): Without a mechanism to align these price calculations, shippers often are left in the dark about the irregularity of BAF prices among different carriers. Bunker Adjustment Factor, BAF. As previously communicated, our revised Bunker Adjustment Factor (BAF) is designed to adjust contract rates within the duration of a contract, based on fluctuations in fuel-related costs. The other relevant parameters form an input into the calculation of the price list. Bunker Adjustment Factor (BAF) Surcharge. In the individual calculation of the fuel surcharge. Bunker adjustment factor, bunker surcharges, or simply BAF, are extra charges enacted by carriers on their rates to counteract increases in fuel prices. You will find here below all … Contargo has therefore decided to include the factors of. Nevertheless, it is likely to divide opinion within the shipping industry. With a close-knit network of its own terminals and transport lines, Contargo links the seaports in Western Europe with the European hinterland. The fuel costs were calculated using publicly available BAFs from these respective carriers. Bunker Adjustment Factor Tips: Smaller charges like this can add confusion, so smaller customers usually receive or should ask for, an all-inclusive port to port charge. This is only one example of how conventional BAFs fail to encompass all fuel cost components, and supports the need for a more agile and comprehensive marine fuel management program. Privacy Policy. 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