What does BAF stand for in Shipping? Managing Freight Tenders During the Crisis. The BAF rate is a non-negotiable pass-through charge. Subsequently, the shipping operators started to set their bunker surcharge independently – monitored by the European Commission. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. VATOS (or Value Of Time Of Shipment) just means that BAF might change and that you … congestion surcharge Charged by transportation carriers to cover the increased costs of operation to, … The innovative software company is headquartered in Luxembourg and has a branch in the Digital Logistics Hub in Hamburg. According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). We only know that cost will go up, but not exactly by how much.” (Source). What is BAF in ocean freight? BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. 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. It was imposed to make up for the extra charges incurred during the shipment of goods. The only word appearing in all the terms is ‘bunker’, the ship’s fuel and therefore an important cost factor for all involved parties. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. 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. The ship operator is responsible for the … 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 … This charge is separated from the base rate freight cost because fuel costs are more frequently subject to fluctuations.. Related entries 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. 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. 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. 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. 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. 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. Container Availability Index (CAx), Ocean Freight Rates and Coronavirus: Rising rates in the Shipping Industry. Simply put: BAF = Fuel Prices x Trade Factor. BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. If the company goes for the latter, the BAF surcharge would now be calculated based on the new fuel charges (which is low in sulphur content), pointing towards increased BAF charges. 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. These charges are determined by Carrier Conferences and are applicable for a certain period and for certain trade routes. I have read the privacy policy. 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). These are condition based charges, to tackle unexpected variations, so that they may or may not apply to your cargo. C CAF (Currency Adjustment Factor) Charge levied during shipping covering the changes to the different currency exchange rates. Baf definition at Dictionary.com, a free online dictionary with pronunciation, synonyms and translation. Bunker Adjustment Factor (BAF) is a floating freight charge or an additional charge which is levied to account for the fluctuation (increase) in the price of the ship's fuel. Everyone is using their favourite term to refer to the same thing, so don’t get confused there. The impact of Coronavirus COVID-19 on Air Freight. Currency Adjustment Factor. For this reason a surcharge is applied to compensate costs. Low sulphur surcharges originate from an International Maritime Organization (IMO) initiative to reduce the amount of sulfuric fuel emissions burned by ocean vessels. Once the fixed BAF is agreed on, it is going to be paid for in this exact height. Apply to the flag state for a waiver on behalf of the IMO. Bunker Adjustment Factor. Some have a different name for it, while some are adding it on the top of their ocean charges – further complicating the matters. Diversion has substantially same meaning. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down.. (“Bunker” refers to the fuel used to carry out shipping operations.). Acronym of Bored as Fuck. BAF and CAF are generally used by sea shipping carriers. 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. BAF (Bunker Adjustment Factor) The BAF is one of the charges levied on goods transported via sea freight. See Bunker Adjustment Factor. Drewry has said 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). 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. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down.. Period of container can be divided into Demurrage and Detention. 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 shipping lines now set their own independent BAF rates. These are charges which levied along with ocean freight to different locations at different season. This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. 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. BAF means Bunker Adjustment Factor and CAF means Currency Adjustment Factor. The term " Bunker " refers to the Fuel that is used to operate ships. Some have a different name for it, while some are adding it on the top of their ocean charges – further complicating the matters. 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. Before that carriers were able to offer long term service contracts with all inclusive rates to their customers. 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. 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. CAF See Currency Adjustment Factor. Top BAF acronym definition related to defence: Bunker Adjustment Factor The European Commission banned Carrier Conferences as of October 17, 2008. 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. They see their costs increased due to higher insurance premiums because of this risk. shipping freight rate, Hamburg Süd will introduce a simple and predictive Bunker Adjustment Factor (BAF). Multimodal and Intermodal Transport Mode explained, What if we can predict the future? Read on to know how the IMO 2020 has impacted the Bunker Adjustment Factor (BAF), and what we can expect in the future. 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. BAF (Bunker Adjustment Factor) is – first of all – the same as a BUC (Bunker Contribution) or an SBF (Standard Bunker Adjustment Factor). Can also be used as BAFF - Bored as Fucking Fuck. 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. . Additional terms and fees to local agents of the line usually via port forwarding. The American Bureau of Shipping (ABS), first chartered in the State of New York in 1862 to certify ship captains. 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