Bunker Adjustment factor (BAF), or Bunker Surcharge (BSC) are surcharges assessed by carrier to freight rates to reflect current cost of bunker. BAF changes every month according to the ups and downs of fuel prices. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. There still isn’t any standard rates for BAF. The American Bureau of Shipping (ABS), first chartered in the State of New York in 1862 to certify ship captains. A fixed BAF is a certain fee that has to be paid for the bunker, no matter how the oil prices develop in the meanwhile. SHIPSTA has become one of the market leaders for eProcurement solutions in Germany. The new BAF will replace the existing one and allow customers to simulate and calculate the BAF tariff at any fuel price for a given trade route. BAF is the abbreviation for Bunker Adjustment Factor. Before that carriers were able to offer long term service contracts with all inclusive rates to their customers. According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). The ‘fixed BAF’, the ‘floating BAF’ and the ‘locked-in BAF’ are the types of BAF in ocean freight, that all come with their special features for cost management. Bunker is simply the name given to the Heavy oil used to fuel ocean vessels. Hapag-Lloyd even does it monthly if the oil’s price volatility exceeds $45 per ton. Managing Freight Tenders During the Crisis. 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. BAF. The procurers save a surplus for themselves if the contrary happens. FCL: per-container LCL: per-wm Import/Export Asia BAF… With vessels becoming more efficient and bunker cost therefore being a less dominant cost factor, fixed bunker prices are becoming more of an option in the market. Baf definition at Dictionary.com, a free online dictionary with pronunciation, synonyms and translation. In the face of adopting a cleaner fuel at a higher price, the priority remains the recovery of additional costs incurred, especially on the high-volume, longer shipping routes – indicating a higher investment for shipping operations, with BAF or without BAF. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down.. 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. To oppose criticism regarding the intransparency of BAF’s, shipping lines came up with pricing models for the BAF based on neutral data provided by third-party agents. Bunker Adjustment Factor. BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. BAF and CAF are generally used by sea shipping carriers. Additional terms and fees to local agents of the line usually via port forwarding. The European Commission banned Carrier Conferences as of October 17, 2008. (“Bunker” refers to the fuel used to carry out shipping operations.). This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. Add the cost of any freight adjustments your shipping company applies to your transport costs. Demurrage penalties are imposed for excess use of container from its unloading at the terminal until the return of empty containers at the port (for imports) or from the date of receipt of the empty container to be loaded before the loading of a container loaded on a ship (for exports). The ship operator is responsible for the … 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. The Bunker Adjustment Factor, short BAF, is a bunker surcharge formerly established because of strongly fluctuating oil prices. Ohne mich! The shipping lines now set their own independent BAF rates. 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. With these fluctuations carriers were no longer able to offer stable freight rates to their customers, and they had to reflect the increases in a format … Read on to know how the IMO 2020 has impacted the Bunker Adjustment Factor (BAF), and what we can expect in the future. These are condition based charges, to tackle unexpected variations, so that they may or may not apply to your cargo. Ship operators and shipping lines update their BAF’s in ocean freight on a regular basis, often monthly, but as well annual or semi-annual. BAF is a surcharge assessed by the carrier to freight rates to reflect current cost of bunker. This option gives a decent price security to the carrier, as it doesn’t lose any money, however oil prices evolve. Subsequently, the shipping operators started to set their bunker surcharge independently – monitored by the European Commission. Of course shippers could also offer an all-inclusive price for the transport. Through this surcharge ocean carriers balance eventual losses for their overseas shipments emerging from fluctuating fuel prices. We only know that cost will go up, but not exactly by how much.” (Source). BAF CHARGES > BUNKER ADJUSTMENT FACTOR (To level price changes in Gasoline/ Oil) CAF CHARGES > CURRENCY ADJUSTMENT FACTOR (To level currency Exchange rate variation) Both BAF & CAF charges are used by shipping lines along with freight charges. This charge is separated from the base rate freight cost because fuel costs are more frequently subject to fluctuations.. Related entries Compliance with this new rule means increased costs of shipping – either additional logistics tariff or the hiked low-sulphur fuel charges. Once the fixed BAF is agreed on, it is going to be paid for in this exact height. CAF. Hereby the BAF might be charged separately or might be a part of the freight rate, depending on the agreement and line. Top BAF acronym definition related to defence: Bunker Adjustment Factor Container Availability Index (CAx), Ocean Freight Rates and Coronavirus: Rising rates in the Shipping Industry. FCL vs. LCL – What is the meaning of these shipping terms? We can expect them to modify their charges and come out with a more competitive and transparent pricing model soon. BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route. Look it up now! C CAF (Currency Adjustment Factor) Charge levied during shipping covering the changes to the different currency exchange rates. Low sulphur surcharges originate from an International Maritime Organization (IMO) initiative to reduce the amount of sulfuric fuel emissions burned by ocean vessels. BAF (or Bunker Adjustment Factor) is a surcharge shipping lines charge to the shippers. Frachtausschreibungen mit Excel? According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). This meant to provide a flexible and transparent solution, without creating an unmanageable chaos of rates due to too many updates. Thus a BAF refers to the topic of volatility in oil prices, that both shippers and procurers have an interest to hedge, as they need a certain price security for the bunker to calculate their respective prices for transport or products. Keeping up with the European Green Deal (EGD) and MARPOL convention, it aims to reduce the pollution levels globally by cutting and controlling emissions. Shipping companies are exposed to risk due to the presence of piracy. The carriers have 3 possible options for implementing this: The adoption of green technologies to control sulphur emissions like installing scrubbers (exhausts), switching to renewable sources of energy, or using fuels with low or very-low sulphur content comes at an added cost. The third option is the locked-in BAF, where both parties agree on a locked-in bunker price for a certain period of time. BAF means Bunker Adjustment Factor and CAF means Currency Adjustment Factor. Shipping BAF acronym meaning defined here. Contrary to that, a floating BAF is linked to the development of oil prices. The ship operators have to pay for the fuel to the respective local supplier and afterwards try to pass the cost on to the customer – through the BAF. Simply put: BAF = Fuel Prices x Trade Factor. The eProcurement platform optimizes freight tenders by digitalizing and automating them. Use the less-expensive bunker fuel, but incurring the cost of installing scrubbers. BAF is listed in the World's largest and most authoritative dictionary database of abbreviations and acronyms The Free Dictionary BAF (Bunker Adjustment Factor) is – first of all – the same as a BUC (Bunker Contribution) or an SBF (Standard Bunker Adjustment Factor). When the cargo is payable in foreign currency and this currency is subject to major exchange rate fluctuations, the shipping company sometimes levies a currency surcharge or CAF (Currency Adjustment Factor) so as to compensate for those exchange rate risks. With the recent implementation of the new emission regulation by the IMO 2020, the shipping industry has gone bonkers, especially regarding the “Bunker” prices what is often called “Bunker adjustment factor” or just BAF. The rate is similar between carriers, and until recently, they struck the same rate. 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. Privacy Policy Diversion has substantially same meaning. These charges are determined by Carrier Conferences and are applicable for a certain period and for certain trade routes. 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 compensate for the risks of price fluctuations. Freight adjustments could include a currency adjustment factor (CAF), which is used to cover changes in currency value, or a bunker adjustment factor (BAF), which is used to cover the cost of fuel during times of unstable oil prices. The trade factor is average fuel consumption for a given trade varying according to the: Formerly, BAF used to be standardized by the Transpacific Stabilisation Agreement (TSA) using the Brent crude oil as a basis. International Maritime Organisation (IMO) has standardized and placed regulations for emission control with its mandatory Data Collection System (DCS) – including the. Describes a state of extreme boredom. Marine Gas Oil Bunker Adjustment Factor New rules on 1 January 2015 On 1 January 2015, the EU Sulphur Directive 2012/33/EU brought about a major reduction in sulphur dioxide emission from ships, and that will heavily impact shipping in northern Europe. Slowly, life is returning to normality. Currency Adjustment Factor. The shippers do gain a surplus, if the fuel price actually decreases during the contract period of the locked-in BAF. VATOS (or Value Of Time Of Shipment) just means that BAF might change and that you … Update on 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 BAF rate is a non-negotiable pass-through charge. Acronym of Bored as Fuck. A Fuel Surcharge expressed as a percentage added or subtracted from the freight amount reflecting the movement in the market place price for bunkers. A bunker surcharge, also known as bunker adjustment factor (BAF), is the charge shipper’s incur to compensate for fluctuating fuel prices and is typically in addition to other surcharges and fees added to the freight costs.Some of those surcharges include: A peak season surcharge (PSS) is the fee that is applied when transporting cargo from Asia, typically anytime between June 1 and October 31. Bunker adjustment factor, bunker surcharge or BAF refers to floating part of sea freight charges which represents additions due to oil prices. We got used to wearing masks in stores and keeping our distance to people.... FCL and LCL are two of common terms used in shipping under Export and Import trade of international businesses.... Privacy Policy The parameters are updated annually at Maersk. The term " Bunker " refers to the Fuel that is used to operate ships. What does BAF stand for in Shipping? What is the term ‘BAF?’ When oil prices fluctuate globally, the BAF is imposed to basic ocean freight to stabilize the cost of … It is also known as 'Fuel Adjustment Factor.' This is the kind of BAF that customers would prefer, if they want to be sure about their final prices and therefore want to know their exact cost. Both are kind of a floating BAF, depending on the oil price, so that shippers have a certain price security for their transportations. BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. Shipping analyst Drewry and the European Shippers’ Council (ESC) have defined and published a simplified BAF indexing mechanism and bunker charge guide to help shippers monitor and control bunker charges as shipping lines switch to the more expensive bunkers required under the IMO 2020 low-sulphur regulation. It is kind of a compromise between the previous two BAF models, that makes the locked-in option have the characteristics of a classic forward deal, where one party is advantaged and one is disadvantaged depending on the direction of the price development. International Maritime Organisation (IMO) has standardized and placed regulations for emission control with its mandatory Data Collection System (DCS) – including the Global Sulphur Cap. The innovative software company is headquartered in Luxembourg and has a branch in the Digital Logistics Hub in Hamburg. BAF represents the floating price level of fuel in ocean freight shipping and is typically updated on a quarterly basis. Everyone is using their favourite term to refer to the same thing, so don’t get confused there. The movement of the market place price for a certain period on a locked-in bunker price for bunkers different at! 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