Bunker fuel is a primary type of fuel oil used aboard ships. Bunker adjustment factor clauses Other provisions provide for freight to be adjusted where bunker prices go above or below certain parameters. Some companies are now using a Bunker Escalation or De-Escalation Clause in their agreements. Bunker Clause: A bunker adjustment shall apply if the cost of Marine Gas Oil exceeds 300.00 per metric ton as per Platts Bunkerwire (Antwerp prices) last issued not less than one (1) working day prior commencement of loading. Compared to the other petroleum products, it is crude and highly polluting. gation and Fire Defenses” as per Clause 5 (1) (b) apply. In this case, if the price of IFO 380 CST as published by Platts Oilgram Bunkerwire on the bill of lading date was US$310/mt spot in Singapore, then the freight rate should be increased by US$1.25. There will be no negative Currency Adjustment Factor. BAF - Bunker adjustment factor. What are bunker adjustment factor (BAF) or surcharge clauses? To find out more, visit our dedicated Covid-19 hub. BAF clauses are often found in voyage charter parties and contracts of affreightment. BAF clauses help carriers hedge against the risk of bunker price volatility. BAF(Bunker Adjustment Factor) :BAF will be calculated as per above formula and will be charged separately from the ocean freight. Some shipping companies are finding it a struggle to explain to their customers that they need to review existing bunker adjustment factor (BAF) clauses, or add other forms of surcharges, because of tightening sulphur limits. 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%. New Bunker Adjustment Factor (BAF) Dear customer, From 1stJanuary 2020, a new regulation will come into force to reduce air pollution from ships globally. New Bunker Adjustment Factor . The shipping lines now set their own independent BAF rates. Bunker adjustment factor clauses Other provisions provide for freight to be adjusted where bunker prices go above or below certain parameters. BAF clauses sit in contracts to manage changes in the price of bunkers, and when sulphur limits inside emission control areas (ECA) fall to 0.10% in 2015, current low sulphur pricing will become irrelevant. The European Commission banned Carrier Conferences as of October 17, 2008. Low sulphur surcharges originate from an International Maritime Organization (IMO) initiative to reduce the amount of sulfuric fuel emissions burned by ocean vessels. The BRF (Bunker Restoration Factor) formula and the BRF table will remain unchanged, substituting only the current reference to IFO380 (high sulphur oil) with a reference to Ultra Low Sulphur Oil (SECA-zone-legal-and-compliant fuel). In the shipping world we hear the bunker term a lot as it is one of the main costs that the carriers incur. This is a clause added to cover them in the event that the bunker costs change in the middle of shipping. (d) In the event that part of the multimodal transport is a shipment to or from the USA and the damage to or loss of the Goods occurs at the time between the loading at the port of loading and the discharging at the port of discharge, US COGSA shall apply. Table; View full table. The latter are expected to be used in the vast majority of vessels following implementation1. This is due to the fact that the price increases seen in recent weeks mean that the fuel price has gone up by more than USD 50 per ton compared to the last time the BAF was adjusted. Markets will likely adjust in line with carriers’ obligations to purchase more expensive low-sulphur fuel. This calculation will be on quarter basis and published one month before the incoming quarter, based on the average fuel price of previous 3 months. The current Bunker Clause will be renewed on the 1st January 2020, same date as the IMO world sulphur cap is introduced. PBCs act as a replacement for the current Bunker Adjustment Factor (BAF) system, along with any other Low Sulphur Surcharge (LSS) and Marine Fuel Recovery (MFR) mechanisms. BAF clauses typically track against prices fixed on a passed date (the bill of lading date in the clause above). Charterers and shipowners can use bunker adjustment factor (BAF) clauses to manage rising fuel cost and the possible volatility in prices due to the 2020 sulphur limit. The Bunker Adjustment Factor is applicable for all services and will be updated on a monthly basis according to the matrix within this document. [1] BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route. Contact Michele White. 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