SHIPSTA has become one of the market leaders for eProcurement solutions in Germany. FCL: per-container LCL: per-wm Import/Export Asia BAF… The rate is similar between carriers, and until recently, they struck the same rate. The impact of Coronavirus COVID-19 on Air Freight. We only know that cost will go up, but not exactly by how much.” (Source). This BAF option does decrease the price security for customers on the other hand, as they don’t have any guarantees about the final cost for transport, or the bunker respectively. 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. Bunker adjustment factor, bunker surcharge or BAF refers to floating part of sea freight charges which represents additions due to oil prices. The Bunker Adjustment Factor, short BAF, is a bunker surcharge formerly established because of strongly fluctuating oil prices. A fixed bunker price or even a CY/CY (Container Yard to Container Yard) agreement would be a way to reduce lots of effort for decision making and could as well provide a price security for both parties. 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. 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). The innovative software company is headquartered in Luxembourg and has a branch in the Digital Logistics Hub in Hamburg. These are condition based charges, to tackle unexpected variations, so that they may or may not apply to your cargo. Diversion has substantially same meaning. 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). VATOS (or Value Of Time Of Shipment) just means that BAF might change and that you … 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. The BAF rate is a non-negotiable pass-through charge. This charge is separated from the base rate freight cost because fuel costs are more frequently subject to fluctuations.. Related entries Both are kind of a floating BAF, depending on the oil price, so that shippers have a certain price security for their transportations. According to the reports, the shipping charges have increased from ~ $10 – $290 TEU on most routes from the Mediterranean to the US Gulf. CAF. 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. 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. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. Apply to the flag state for a waiver on behalf of the IMO. For this reason a surcharge is applied to compensate costs. Can also be used as BAFF - Bored as Fucking Fuck. In order to counter the fluctuations in oil prices, the shipping lines charge a surcharge on top of the ocean freight, known as Bunker Adjustment Factor (BAF).. BAF (or Bunker Adjustment Factor) is a surcharge shipping lines charge to the shippers. Some have a different name for it, while some are adding it on the top of their ocean charges – further complicating the matters. 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. BAF. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down.. There are basically three different ways that shippers came up with to distribute the cost of fuel. 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 Some have a different name for it, while some are adding it on the top of their ocean charges – further complicating the matters. With the coming of the new regulation, it seems that each ship operator has approached it in their own way. Container Availability Index (CAx), Ocean Freight Rates and Coronavirus: Rising rates in the Shipping Industry. BAF is the abbreviation for Bunker Adjustment Factor. Everyone is using their favourite term to refer to the same thing, so don’t get confused there. Looking for online definition of BAF or what BAF stands for? 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. These charges are determined by Carrier Conferences and are applicable for a certain period and for certain trade routes. . The eProcurement platform optimizes freight tenders by digitalizing and automating them. They see their costs increased due to higher insurance premiums because of this risk. According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. Frachtausschreibungen mit Excel? Multimodal and Intermodal Transport Mode explained, What if we can predict the future? 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. CAF See Currency Adjustment Factor. With the coming of the IMO 2020, a new regulation has come into force from January 1, 2020. 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. While BAF is designed to recover increases in bunker related costs the compliance costs have not been catered for by any of the shipping lines.. 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. For example the varying global oil prices. BAF: Best Angular Fit: BAF: Busy As Full (polite form; restaurant slang) BAF: British Armwrestling Federation (England, UK) BAF: Buble/Aiken Foundation: BAF: Benefit Audit Fund (State of California unemployment system) BAF: Bayerische Akademie für Fernsehen eV (Germany) BAF: Ban Asbestos France (est. Period of container can be divided into Demurrage and Detention. Hapag-Lloyd even does it monthly if the oil’s price volatility exceeds $45 per ton. What does BAF stand for in Shipping? It was imposed to make up for the extra charges incurred during the shipment of goods. 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. See Bunker Adjustment Factor. Of course shippers could also offer an all-inclusive price for the transport. Other shipping terms that you may hear… BAF. Carnet Shipping companies are exposed to risk due to the presence of piracy. Bunker Adjustment Factor. 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. These are charges which levied along with ocean freight to different locations at different season. The shipping lines now set their own independent BAF rates. Bunker Adjustment factor (BAF), or Bunker Surcharge (BSC) are surcharges assessed by carrier to freight rates to reflect current cost of bunker. 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. Then Demurrage penalties imposed for excess use of container from its unlo… Bunker is simply the name given to the Heavy oil used to fuel ocean vessels. Contrary to that, a floating BAF is linked to the development of oil prices. Describes a state of extreme boredom. How to distinguish between CAF and BAF? SHIPSTA’s clients include global companies from sectors such as food, high tech, pharma and automotive. Bunker Adjustment Factor or BAF is an additional surcharge levied on the ship operators to compensate for the fluctuations in the fuel prices. The American Bureau of Shipping (ABS), first chartered in the State of New York in 1862 to certify ship captains. 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. The Bunker Adjustment Factor is an additional charge added to the base rate ocean freight cost reflecting the cost of fuel (called bunkers)to be used for the voyage. Read on to know how the IMO 2020 has impacted the Bunker Adjustment Factor (BAF), and what we can expect in the future. 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. Low sulphur surcharges originate from an International Maritime Organization (IMO) initiative to reduce the amount of sulfuric fuel emissions burned by ocean vessels. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down.. 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. Privacy Policy One might question himself: Why is BAF even an extra fee? Depending on what their customers are looking for and how the oil-prices develop. BAF changes every month according to the ups and downs of fuel prices. Compliance with this new rule means increased costs of shipping – either additional logistics tariff or the hiked low-sulphur fuel charges. Simply put: BAF = Fuel Prices x Trade Factor. CAF. Top BAF acronym definition related to defence: Bunker Adjustment Factor Acronym of Bored as Fuck. This option gives a decent price security to the carrier, as it doesn’t lose any money, however oil prices evolve. What is the term ‘BAF?’ When oil prices fluctuate globally, the BAF is imposed to basic ocean freight to stabilize the cost of … Subsequently, the shipping operators started to set their bunker surcharge independently – monitored by the European Commission. The European Commission banned Carrier Conferences as of October 17, 2008. According to the new rule, the sulphur emissions should be cut from 3.5% to now, 0.5% (outside ECAs). 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. This meant to provide a flexible and transparent solution, without creating an unmanageable chaos of rates due to too many updates. BAF represents the floating price level of fuel in ocean freight shipping and is typically updated on a quarterly basis. The procurers save a surplus for themselves if the contrary happens. Slowly, life is returning to normality. It is also known as 'Fuel Adjustment Factor.' BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route. But, in 2018, TSA was disbanded following the resignation of its key member, Maersk Line. International Maritime Organisation (IMO) has standardized and placed regulations for emission control with its mandatory Data Collection System (DCS) – including the Global Sulphur Cap. 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 … 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. Managing Freight Tenders During the Crisis. congestion surcharge Charged by transportation carriers to cover the increased costs of operation to, … The shippers do gain a surplus, if the fuel price actually decreases during the contract period of the locked-in BAF. Get our monthly news about digital freight tendering and logistic procurement: How shippers can carry out freight and transport tenders in a beneficial way, The impact of the crisis on the port of Hamburg. Still even quarterly rates might become an administrative challenge and with every shipper having their own formula, it is indeed getting harder and harder to manage the BAF in procurement. Ohne mich! Off-sea, the carriers have raised their revenues to cover their increased fuel-costs after implementing the new regulation. 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. BAF = (Total Fuel Consumption x Transit Time ) / (Vessel’s Total Capacity) x Utilization Factor, BAF = (Fuel Price Per TO) x (Fuel Consumption in TO) / Carried TEU. I have read the privacy policy. 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 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. 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. shipping freight rate, Hamburg Süd will introduce a simple and predictive Bunker Adjustment Factor (BAF). Shipping BAF acronym meaning defined here. The ship operator is responsible for the … BAF means Bunker Adjustment Factor and CAF means Currency Adjustment Factor. baf Bunker Adjustment Factor. C CAF (Currency Adjustment Factor) Charge levied during shipping covering the changes to the different currency exchange rates. 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. This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. Additional terms and fees to local agents of the line usually via port forwarding. Before that carriers were able to offer long term service contracts with all inclusive rates to their customers. BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. Look it up now! Everyone is using their favourite term to refer to the same thing, so don’t get confused there. 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). Currency Adjustment Factor. Both companies calculate their new BAF quarter-annually. BAF is a surcharge assessed by the carrier to freight rates to reflect current cost of bunker. Use the less-expensive bunker fuel, but incurring the cost of installing scrubbers. 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 ‘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. The third option is the locked-in BAF, where both parties agree on a locked-in bunker price for a certain period of time. 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. A Fuel Surcharge expressed as a percentage added or subtracted from the freight amount reflecting the movement in the market place price for bunkers. Baf definition at Dictionary.com, a free online dictionary with pronunciation, synonyms and translation. Add the cost of any freight adjustments your shipping company applies to your transport costs. The only word appearing in all the terms is ‘bunker’, the ship’s fuel and therefore an important cost factor for all involved parties. The parameters are updated annually at Maersk. BAF (Bunker Adjustment Factor) The BAF is one of the charges levied on goods transported via sea freight. SHIPSTA was founded by Christian Wilhelm (CEO), Stefan Maratzki (CTO) and Oliver Ritzmann (CCO) in 2015. We can expect them to modify their charges and come out with a more competitive and transparent pricing model soon. 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. It was imposed to make up for the extra charges incurred during the shipment of goods. BAF (Bunker Adjustment Factor) is – first of all – the same as a BUC (Bunker Contribution) or an SBF (Standard Bunker Adjustment Factor). Through this surcharge ocean carriers balance eventual losses for their overseas shipments emerging from fluctuating fuel prices. Once the fixed BAF is agreed on, it is going to be paid for in this exact height. The term " Bunker " refers to the Fuel that is used to operate ships. Also called ‘Fuel Adjustment Factor’ or ‘Bunker Surcharge’, BAF represents the floating part of sea freight charges to adjust the volatility of the fuel prices. This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. BAF is based on Twenty-foot Equivalent Unit (TEU) and varies according to the trade routes. (“Bunker” refers to the fuel used to carry out shipping operations.). What is BAF in ocean freight? 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. Hereby the BAF might be charged separately or might be a part of the freight rate, depending on the agreement and line. International Maritime Organisation (IMO) has standardized and placed regulations for emission control with its mandatory Data Collection System (DCS) – including the. There still isn’t any standard rates for 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. 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