Maersk Line changes to BAF
Maersk wants to change the fuel adjustment charge before the IMO sulphur 2020 regulations are set in motion. A new Bunker Adjustment factor (BAF) bill will give customers the opportunity to predict, plan and witness how the changes in fuel prices effects the frequency of shipments.
”We fully support the new regulations, they will be a major benefit to the environment and peoples health. The IMO sulphur 202 regulations affect the rules of the shipping industry. Maersks preparations to live up to the terms have started, and our customers are doing the same. The new BAF is a simple, reasonable and foreseeable mechanism, which creates clarity for our customers, so that they can plan supply chains with this significant change occurring” says Vincent Clerc, Chief Commercial Officer, A.P. Møller - Maersk A/S.
The new BAF bill aims to keep Maersk Line costs down alongside the global sulphur requirements, which will be official from January 1, 2020. The regulations were developed and adopted by the International Maritime Organization (IMO), a specialized agency under United Nations (UN). Today, ships can use fuel with a sulphur content of 3.5 percent, while the new limit is 0.5 percent.
In order to meet the demands, shipping companies have to invest in compatible fuel types such as LNG or the scrubber technology. These changes are expected to reduce the global sulphur emission resulting from shipping, which has been a known source of respiratory diseases, by 80 percent.
The changes will bring price increases and doubts about the costs of fuel used for shipping. The BAF bill is based on working against increased fuel related costs. This is collected separately from Maersk Lines freight rates.
Based on expected price differences between the current 3.5 percent bunker fuel and compatible 0.5 percent fuel, outside sources are estimating that the additional cost for the global container shipping industry could be up to 15 billion U.S Dollars. Maersk Line expects the additional fuel costs to exceed two billion Dollars.
The BAF will be replacing Maersk Lines current Standard Bunker Adjustment Factor (SBF) bill. In order for customers to get acquainted with the formal changes, Maersk Line will introduce the BAF bill on January 1, 2019.
Source: A. P. Møller Mærsk / Maritime Danmark