Laval Group needs to get a better understanding of the bunker adjustment factor, currency adjustment factor and terminal handling cost, which shipping companies add to their base price, and to take control over the surcharge variations during the year. Bunker prices have tripled within the last three years and bunker costs now constitute nearly half of the total vessel costs, up from 20% around 10 years ago. Some of those surcharges include: In 2019, we have used the fuel price for high-sulphur fuel (3.5% sulphur) to calculate the BAF. As bunker fuel prices are quite volatile, the shipping lines charge a fee called "Bunker Adjustment Factor (BAF)" to cover the … 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. The other charges related to coastal Emission Control Areas (ECAs) will remain in place.. You can read the full calculation mechanism here.. As per MSC, the BRC replaces the current Bunker Contribution (BUC), Fuel Adjustment Factor (FAD) and Emergency Fuel Surcharge (EFS), and largely absorbs other pre-existing fuel-related charges.. The shipping industry became very energy and capital focused with the development of containerization and usage of containers ships. Every car driver is familiar with fluctuating prices of petrol. We use Bunkerworld’s fuel price index 0.5% Sulphur fuel oil (VLSFO) for the BAF and EFF calculation. You will find here below all … Another determinant is the vessel’s direction. 2019, Arkas Line will start to publish the new Bunker Adjustment Factor (BAF ) based on regional corridors. optimization—all leading up to a shift in focus. It periodically changes, typically monthly or quarterly. * The details on 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. 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. The fuel consumed within ECAs is accounted for with a separate surcharge, which complicates fuel cost management. The fuel price will be the same for all trades and is calculated as the average bunker price in key supply ports around the world over a period said to be "typically" three months. Privacy Policy. Matt MuensterSenior Manager, Applied Knowledge. For example, the fuel cost of moving a twenty-foot equivalent unit (TEU) from Shanghai to LA/Long Beach varies across carriers by a factor of 4 (as shown above). In some cases, the same trade lanes with similar levels of service can have drastically different BAF prices. ONE also filed a ONE Bunker Surcharge (OBS) in its FMC tariff. 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%. These prices constitute a significant percentage of the total cost of transporting goods. Speed is also a significant factor. schedules handed for generations without questioning Expect to see HSFO discounts to crude oil grow, sending HSFO to lower prices through the coming quarters. Oh, what a tangled web we weave,/ When first we practise to deceive! Overall, Hapag-Lloyd says the bunker adjustment factor (BAF) aims for ‘transparent calculation of costs’. All of this makes for a passively managed line item in shippers’ budgets. today’s strategies. Remove distorted transportation practices and reveal data-driven insights with FELIX. Oil Prices and Bunker Adjustment Factor Surcharges. 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. 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. He is able to apply the research, industry data, and understanding of market fundamentals to translate energy industry information to our clients in an actionable manner. With a close-knit network of its own terminals and transport lines, Contargo links the seaports in Western Europe with the European hinterland. Nevertheless, it is likely to divide opinion within the shipping industry. Contargo is also in competition with other service suppliers and always tries to lead the field, not only in the quality of its services but by its reasonable prices. Americas Shipping and Cargo Services Sealand – A Maersk Company has reviewed its Bunker Adjustment Factor (BAF), and the new tariffs will be effective 1 October 2020. It applies to contracts with validity longer than 3 months. Inland barge operators are subject to the same kind of variations. New rules on 1 January 2015. One determinant is distance. Here you can see a few simple and convenient ways to calculate the bunker … To ensure that our price structuring stays fair, we pass on the current prices to the customer in the form of a fuel surcharge. The other relevant parameters form an input into the calculation of the price list. This new BAF will be calculated based on a simple formula that bunker price per ton will be multiplied by regional trade driver as in the following: REGIONAL . Bunker Adjustment Factors Are a Thing of the Past. why they are used or whether they continue to fit All rights reserved. To achieve visibility and control over marine fuel spend, shippers need to consider how distortions associated with traditional BAF programs may impact their ocean shipping strategy. Bunker, Bunkering and Bunker Adjustment Factor September 28, 2017 August 1, 2011 by Hariesh Manaadiar Categories FAQ , Questions and Answers , Shipping and Freight Tags Bunker , Fuel oil , IFO , Marine diesel oil , Maritime 32 Comments Estimated reading time = 2 minutes The cost of bunker oil fluctuates continually and with comparatively little warning. BUNKER ADJUSTMENT FACTOR (BAF) - Molpower.com BUNKER ADJUSTMENT FACTOR (BAF) Surcharge for additional fuel cost for carrier, BAF quantum per TEU. This field is for validation purposes and should be left unchanged. All our BAF calculations are based on the average price for … Sealand – A Maersk Company has reviewed its Bunker Adjustment Factor (BAF), and the new tariffs will be effective 1 July 2020. Bunker Adjustment Factor (BAF) "Bunkers" is the generic name given to fuels and lubricants that provide energy to power ships. Bunker Adjustment Factor (BAF) August 28, 2020 Dear Customer, Sealand – A Maersk Company has reviewed its Bunker Adjustment Factor (BAF), and the new tariffs will be effective 1 October 2020. BAF represents the floating price level of fuel in ocean freight shipping and is typically updated on a quarterly basis. In 2019, we have used the fuel price for high-sulphur fuel (3.5% sulphur) to calculate the BAF. Standard Bunker Adjustment Factor (SBF) Tariff levels applicable for Q2 2016 (1 April 2016 to 30 June 2016) From Far East Asia One institution that finds acceptance throughout the transport sector is the Centraal Bureau voor ee Rijn- en Binnenvaart (CBRB) in the Netherlands. in data science, artificial intelligence, and It applies to contracts with validity longer than 3 months. One major emerging challenge is the long-standing inconsistency in BAF practices. Another relevant parameter is the build of the ship (barge train, single boater). The Bunker Adjustment Factor (BAF) system was first introduced following the oil shocks of the 1970s. 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. The fuel consumed within ECAs is accounted for with a separate surcharge, which complicates fuel cost management. Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 … Bunkering is the action of supplying a ship with bunkers. The European Commission banned Carrier Conferences as of October 17, 2008. The BAF is calculated by multiplying the so-called ' trade factor ' by the fuel price. 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. If the price of gasoil is high, our customers bear the additional load via an increased fuel surcharge, and if gasoil prices go down, we pass on this benefit to our customers in the form of a lower fuel surcharge. One important aspect is the continuous optimisation of all processes, most importantly by the use of intelligent software systems. In this way it is possible to compensate to some extent the general cost drivers such as energy, wages and salaries, and generally rising prices. Most shippers reimburse for fuel with fuel surcharge Maersk Line said in a statement in Mumbai that it has introduced a new formula for floating BAF (Bunker Adjustment Factor). Additionally, there is little line of sight into how technology and fuel efficiency improvements manifest in what shippers and carriers incur in fuel costs. The changing landscape of the maritime shipping industry highlighted the distortions and inefficiencies in shippers’ existing marine fuel practices. 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. Bunker Adjustment Factor, BAF. No two carriers set prices the same way. Sign up now and get our fuel advisor brief, 920-617-3070 • 400 S. Washington Street, Green Bay, WI 54301, ©2020 Breakthrough. BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route.. Regardless of how the industry evolves, fuel will continue to be a volatile cost component for shippers and carriers alike. For example, some updated BAF programs fail to incorporate fuel consumed within emission control areas (ECA) into the calculation. As part of this process, both specific trade lane characteristics and shipper’s network profile can be accounted for to create an accurate and fair fuel reimbursement mechanism that adjusts to market realities and fluctuates with changes in bunker prices. 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. These surcharges safeguard carriers against one of the most volatile factors in the shipping industry: oil prices. The fuel costs shown reflect the cost of moving a single TEU with an average fuel price of $500/mt. The term "Bunker" refers to the fuel that is used to operate ships. 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. In canals, which generally have no current, this parameter can be discounted. fuel price; distance and; size and weight of the container; In the individual calculation of the fuel surcharge. The result is the "Bunker Adjustment Factor" (BAF) or bunker charge. 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. 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. Global maritime fuel markets are becoming more complex. The transportation industry is fundamentally changing. 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