Ocean Freight Surcharges
BAF Surcharge (Bunker Adjustment Factor)
BAF (Bunker Adjustment Factor): Fuel cost adjustment based on bunker price fluctuations. When it applies, typical range, and who pays under common Incoterms.
- Code
- BAF
- Name
- Bunker Adjustment Factor
- Typical range
- $50-$800 per TEU depending on route length and fuel prices
- Routes
- All ocean routes worldwide
The Bunker Adjustment Factor (BAF) is a surcharge applied by shipping lines to compensate for fluctuations in fuel (bunker) prices. As fuel costs represent a significant portion of operating expenses for vessels, carriers use BAF to pass on these variable costs to shippers.
BAF is calculated based on the price of marine fuel oil at key bunkering ports. When fuel prices rise, BAF increases; when they fall, BAF decreases. This mechanism allows carriers to maintain stable base freight rates while adjusting for volatile fuel costs.
The calculation typically considers: • Current bunker fuel prices at major bunkering hubs (Singapore, Rotterdam, Houston) • The vessel's fuel consumption for the specific route • The distance of the voyage
BAF is usually expressed as a fixed amount per container (TEU/FEU) or as a percentage of the base freight rate.
When BAF applies
Applied on all ocean freight shipments. Adjusted monthly or quarterly based on fuel price indices.
Who pays BAF under common Incoterms
- FOB: buyer
- CIF: seller
- EXW: buyer
- DAP: seller
How to minimize BAF
- Negotiate BAF caps in long-term contracts
- Lock in fuel prices through forward contracts with carriers
- Choose carriers with more fuel-efficient vessels
- Consider slow-steaming options that use less fuel
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Frequently asked questions
What is the BAF surcharge?
BAF stands for Bunker Adjustment Factor. Fuel cost adjustment based on bunker price fluctuations.
When does BAF apply?
Applied on all ocean freight shipments. Adjusted monthly or quarterly based on fuel price indices.
How much is BAF?
The typical range is $50-$800 per TEU depending on route length and fuel prices. Confirm the current amount with your carrier or forwarder.