Maersk Revises Its Bunker Adjustment Factor (BAF) and EFF Ahead of 2020

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  • Maersk issues a new Environmental Fuel Fee, and updates the existing Bunker Adjustment Factor, with respect to the approaching IMO2020.
  • The Bunker Adjustment Factor is designed to adjust contract rates within the duration of a contract, based on fluctuations in fuel-related costs.
  • The Environmental Fuel Fee applies to all spot business and contracts with validity up to 3 months.

In light of the approaching 2020 sulphur cap, which sees vessels using fuel containing up to 0.5% sulphur, Maersk’s Jacob A. Sterling tweeted that the cost of compliance will increase. Thus, the company issues a new Environmental Fuel Fee and updates the existing Bunker Adjustment Factor, reports Maersk in their website.

IMO 2020 Regulation

From 1st January 2020, a new regulation will come into force to reduce air pollution from ships globally. 

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%.

The cost of compliance with the new regulation will be significant, so the cost of shipping will increase.

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. 

It applies to contracts with validity longer than 3 months.

In 2019, we have used the fuel price for high-sulphur fuel (3.5% sulphur) to calculate the BAF. 

From 1st January 2020, the BAF tariff will be calculated based on the fuel price for 0.1% sulphur gasoil with a fixed deduction of 50 USD/ton.

New Environmental Fuel Fee (EFF)

Effective from 1st December 2019, Maersk will introduce an Environmental Fuel Fee (EFF) on all trades, which will apply to all spot business and contracts with validity up to 3 months.

The EFF tariff will be trade-specific and reflect the fuel-related cost increases that result from compliance to the IMO 2020 regulation (calculated as the price difference between high sulphur fuel and low sulphur fuel multiplied by a trade factor).

The EFF tariffs will only be reviewed in case of significant fuel price fluctuations (more than 50 USD/ton).

The EFF tariffs applicable from 1st December 2019 will be announced end-October 2019.

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Source: Maersk

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