Bunker Adjustment Factor (BAF) Surcharge. There still isn’t any standard rates for BAF. Cargo Shipping FAF abbreviation meaning defined here. This charge was initially imposed to mitigate the impact of unexpected operational costs that hit the shipping industry. It was imposed to make up for the extra charges incurred during the shipment of goods. Also known as ancillary charge. A volatile environment. This leads to excessive order of the ships and the airplanes. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. is average fuel consumption for a given trade varying according to the: (EGD) and MARPOL convention, it aims to reduce the pollution levels globally by cutting and controlling emissions. When fuel prices are subject to major price fluctuations, the shipping company sometimes levies a bunker surcharge or BAF (Bunker Adjustment Factor) of BUC (Bunker Contribution) so as to … For example, the booking party may pay the line and other vendors all charges from packing the cargo into the container, inspection charges, customs clearance, cargo dues (wharfage), documentation charges, VGM, transportation to the port, THC at the load port, shipping line charges… In such an industry fuel could be considered one of the most critical costs where the fuel may be as high as 50% of the carriers cost. The BAF rate is a non-negotiable pass-through charge. Shipping cycle. In a commentary published by the Journal of Commerce, Klaus Schnede, manager, North America Marine Category at Eastman, said: “We are not anywhere close to fully understanding the financial impact [of the IMO 2020 rule] to any of the parties. These prices constitute a significant percentage of the total cost … It is called BAF as we mentioned above. We only know that cost will go up, but not exactly by how much.” (, that freight rates are expected to continue to rise on account of higher bunker surcharges, “but for carriers, the true measure of success will be whether or not they rise sufficiently to cover the additional costs.” The question remains: “Why should the bunker charges be based 100% on low-sulphur fuels, when an increasing number of vessels are equipped with scrubbers (using cheaper fuels), with LNG or dual-fuel engines?” (Source: Drewry), The Bunker Adjustment Factor (BAF) explained. … Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. Its price varies according to the shipping company and chosen route. The ship operator is responsible for the … Apply to the flag state for a waiver on behalf of the IMO. A trigger point of GBP 338 per metric ton MGO exists across all routes, above which we are obliged to … The BAF is applied on top of the ocean freight charges and will still be revised on a quarterly basis with a one-month notice. BAF Calculator In order to determine the complete price, please click on below links to have an overview of the following rate elements (for trades to and from the European Economic Area): … As fuel prices are quite volatile, the shipping lines charge a fee called " Bunker Adjustment Factor (BAF) " to cover the fluctuations in global bunker costs. Low sulphur surcharges originate from an International Maritime Organization (IMO) … Simply put: BAF = Fuel Prices x Trade Factor. For more information, click to view APL… 30 days rolling USD/GBP average as per Exchangerate.org.uk. Both are kind of a floating BAF, depending on the oil price, so … . The line adopted our methodology for its Marine Fuel Recovery (MFR) mechanism. Bunker is one of the most important costs for a container shipping line. BAF represents the floating price level of fuel in ocean freight shipping and is typically updated on a quarterly basis. Accessorial Charges: Charges that are applied to the base tariff rate or base contract rate, e.g., bunkers, container, currency or destination/delivery. Update March, 16: Shortage of Equipment in the US & Northern Europe, COVID-19: The Shipping Industry and the Call for Force Majeure, SOC Containers compared to COC Containers. BAF refers to floating part of sea freight charges which represents additions due to oil prices. Some have a different name for it, while some are adding it on the top of their ocean charges – further complicating the matters. Keeping up with the European Green Deal (EGD) and MARPOL convention, it aims to reduce the pollution levels globally by cutting and controlling emissions. The BAF charge isn’t usually that big of a deal, but it can be confusing if you are encountering it on your freight invoice for the first time, so we want to quickly clear that up for you. Companies such as Hamburg Süd are already implementing the charges. BAF charges used to be determined by Carrier Conferences to … Q: What is the source for the container shipping … With the coming of the new regulation, it seems that each ship operator has approached it in their own way. With the coming of the IMO 2020, a new regulation has come into force from January 1, 2020. Then Demurrage penalties imposed for excess use of container from its unlo… £1 = $1.34. BAF tariff at any fuel price for a given trade route. Although PSS is a global charge… According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). Please find hereunder detailed information as for the new BAF as from 2019. To allow customers and Maersk to manage the volatility and cost exposure in a fair manner, the Maersk Environmental Fuel Fee (EFF) and the Quarterly Bunker Adjustment Factor (BAF) … (“Bunker” refers to the fuel used to carry out shipping operations.). But, in 2018, TSA was disbanded following the resignation of its key member, Maersk Line. Here’s an overview of the pricing (based on sailing from Asia to North Europe): As evident from the table, there is a big disparity in the post-IMO bunker charges, with carriers introducing their bunker programs. 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