Drewry Fuel Advisory Services Will Assist in Understanding BAF Mechanism

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In a major development, Drewry has launched a new range of fuel advisory and management services, commenting that they are ‘designed exclusively for shippers and forwarders’, at a time when fuel quality and compliance play a crucial role in the shipping industry, reports Safety4Sea.

Enhancing Fuel Cost Transparency

Specifically, Drewry has been collaborating with shippers and industry representative organizations aiming to enhance fuel cost transparency and contractual practices, such that shippers can reduce their exposure to excessive BAFs and have better control over and understanding of the fuel portion of ocean freight rates.

The New Services

Meanwhile, the launch of the new services come after the official implementation of the 2020 sulphur cap, as the consultancy expects some confusion over the new charges introduced by carriers until the market is fully used to the new fuel standard.

Philip Damas, head of Drewry Supply Chain Advisors stated that

“Following implementation of the IMO 2020 low-sulphur rule change we have already seen extreme variations in fuel charges between carriers on the same tradelane, for similar ship sizes – even shared vessels”.

He further noted that the Asia-to-US East Coast route, across a sample of five carriers they noticed an increase in their BAFs by about 40% in Q1 of 2020, whereas others by just 15%.

Assist in BAF Mechanism Understanding

Drewry expects that the services will assist stakeholders review their existing processes and implement a standard BAF mechanism, covering measurement and adjustment periods, fuel prices and index formulae.

“We believe shippers and forwarders can gain both clarity and more control over fuel prices – essential pre-requisites to achieving more competitive and successful outcomes from their carrier negotiations”.

The consultant also launched its first low-sulphur bunker index tracker in December 2019, while collaborating with the European Shipper’s Council (ESC), Drewry published a simplified BAF indexing mechanism and a bunker charge guide, assisting shippers to monitor and control the bunker changes drawn up by the ESC-Drewry IMO indexing toolkit.

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Source: Safety4Sea