Maersk Line to Introduce IMO 2020 BAF From Next Year

Monday September 17, 2018

Maersk Line says it will introduce a new bunker adjustment factor (BAF) charge designed to recover increases in fuel related costs associated with the upcoming “IMO 2020” global 0.50% sulfur cap on marine fuel.

It will be charged separately from Maersk Line’s freight rate and introduced from January 1, 2019.

"The new BAF is a simple, fair and predictable mechanism that ensures clarity for our customers in planning their supply chains for this significant shift," says Vincent Clerc, Chief Commercial Officer, A.P. Moller - Maersk A/S.

Maersk Line expects its extra fuel costs could exceed $2 billion.

"The BAF replaces Maersk Line’s current Standard Bunker Adjustment Factor (SBF) surcharge and consists of two key elements; the fuel price which is calculated as the average fuel price in key bunkering ports around the world, and a trade factor that reflects the average fuel consumption on a given trade lane as a result of variables like transit time, fuel efficiency and trade imbalances between head haul and backhaul legs," Maersk explains.

"Combining the two factors give customers full predictability of their costs at any given fuel price both before and after 2020."

The IMO 2020 rule comes into force from January 1, 2020, but operators are will need to switch to complaint fuels well ahead of the deadline to avoid compliance issues.