How is bunker adjustment factor calculated?

How is bunker adjustment factor calculated?

The BAF is calculated by multiplying the so-called ‘trade factor’ by the fuel price. The fuel price will be the same for all trades and is calculated as the average bunker price in key supply ports around the world over a period said to be “typically” three months.

What is Bunker Surcharge shipping?

Bunker adjustment factor, bunker surcharge or BAF refers to the floating part of sea freight charges which represents additions due to oil prices. BAF charges used to be determined by Carrier Conferences to be applicable for a certain period on a certain trade route.

What is a bunker rate?

The bunker surcharge, or bunker adjustment, is specific to ocean carrier’s fuel costs that change on a month-to-month basis. One month fuel rates are down so the surcharge may be less and vice versa, shippers are faced with higher surcharges when fuel costs are on the rise.

What is bunker recovery charge?

MSC’s new Bunker Recovery Charge (BRC) replaces the current Bunker Contribution (BUC), Fuel Adjustment Factor (FAD) and Emergency Fuel Surcharge (EFS), and largely absorbs other pre-existing fuel-related charges. Charges specifically related to coastal Emission Control Areas (ECAs) will remain in place.

What does Bunker Adjustment Factor do?

The Bunker Adjustment Factor (BAF) is an additional charge levied on the shippers to compensate for fluctuations in the price of the ship’s fuel. Also referred to as bunker surcharge, it is tied to the price of Brent crude oil, a major benchmark for worldwide oil prices.

What is PSS in ocean freight?

PSS (Peak Season Surcharge) is a variable surcharge that carriers may apply during times of peak demand.

Is GST applicable on Bunker Adjustment Factor?

No, as per IGST rule 13(9), this transaction is not taxable.

What does BAF in shipping mean?

Bunker Adjustment Factor
BAF is the abbreviation for Bunker Adjustment Factor. The term “Bunker” refers to the Fuel that is used to operate ships. The ship operator is responsible for the payment of these bunkers to the bunker supplier.

What is PSS in shipping line?

The above surcharge acronyms mean: OF (Ocean Freight), OHC (Origin Terminal Handling Charge), DHC (Destination Terminal Handling Charge), ERS (Emergency Risk Surcharge), BAF (Bunker Adjustment Factor), LSS (Low Sulphur Surcharge) and PSS (Peak Season Surcharge).

What does peak surcharge mean?

Peak Season Surcharges (PSS) refer to temporary surcharges that major shipping carriers will apply to their base rate to cover increased operational costs during periods of high demand. Most surcharges take the form of a flat fee applied per package and can differ widely between carriers.

How are sea freight rates calculated?

LCL shipment Ocean freight – This is the base rate for ocean freight. Under LCL this cost is calculated as: weight (in tons) or volume (in cubic meters) of the shipment, whichever is higher, multiplied by the base rate charged by the shipping line. Under FCL the base rate is based on container capacity.

What is GRI in shipping?

A general rate increase (GRI) is an adjustment of sea freight rates across all or specific trade routes during a set time frame. GRIs are usually spurred by the supply and demand chain within freight shipping and generally initiated by bigger carriers.

How is the Bunker adjustment factor calculated on a ship?

Thus, the Bunker Adjustment Factor is calculated based on each TEU aboard a vessel, and the surcharge for increased oil prices is charged to each shipper equally. That may sound unfair, but if you’ve encountered a Bunker Adjustment Factor charge on your freight invoice, you’ve probably noticed it’s a relatively small number.

Can a wrong calculation lead to a bunker shortage?

Bunker calculation having very much significance in bunkering, at times wrong calculation can lead to shortage of bunker, oil spill etc. Here you can see a few simple and convenient ways to calculate the bunker Quantity.

Why is bunker quantity always said in metric ton?

Bunker quantity is always said in Metric Ton (MT) because volume of oil changes according to the temperature , so it is always preferable to take bunker in weight which does not get changed with the change in temperature. But in actual scenario it’s impossible to weigh the fuel oil physically . so we convert weight in to volume (m3).

When do new bunker surcharges come into force?

But, in 2018, TSA was disbanded following the resignation of its key member, Maersk Line. Subsequently, the shipping operators started to set their bunker surcharge independently – monitored by the European Commission. With the coming of the IMO 2020, a new regulation has come into force from January 1, 2020.

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