Thus, Maersk provides an update on its Bunker Adjustment Factor (BAF).

[The Bunker Adjustment Factor is designed to adjust contract rates within the duration of a contract, based on fluctuations in fuel-related costs. It applies to contracts with validity longer than 3 months.] 

Maersk adds that in 2019 they calculated the BAF using the fuel price for high-sulphur fuel (3.5% sulphur). However, from January 1 2020, the BAF tariff will be calculated based on the fuel price for 0.1% sulphur gasoil with a fixed deduction of 50 USD/ton.

 

 

In addition, Maersk issues an Environmental Fuel Fee (EFF), which will come into effect in December 1st 2019.

[The Environmental Fuel Fee applies to all spot business and contracts with validity up to 3 months.]

Specifically, the EFF tariff will be trade-specific and reflect the fuel-related cost increases that result from compliance to the IMO 2020 regulation, calculated as the price difference between high sulphur fuel and low sulphur fuel multiplied by a trade factor.

Also, the EFF tariffs will be reviewed only in a possibility of significant fuel price fluctuations (more than 50 USD/ton).

The EFF tariffs applicable from 1st December 2019 will be announced end-October 2019.

Credit: @jacobasterling