What does Bunker Adjustment Factor (BAF) mean in shipping terms?
If the fuel price increases, the ship operators will also modify the shipping price, meaning the fluctuation difference will be additionally charged. These prices are relatively volatile, and the operators will have to compensate somehow to avoid loss. Furthermore, the costs are taken as average from all the ports worldwide. The Trade Factor represents the average fuel consumption for a specific trade and considers the fuel efficiency, trade imbalance and the expected transit time. This surcharge is calculated according to the following:
Fuel price x Trade Factor = BAF
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