World’s largest container shipping company Maersk Line is planning to introduce a new fuel adjustment surcharge ahead of the 2020 sulphur cap.
As explained, the new Bunker Adjustment Factor (BAF) surcharge aims at recovering Maersk Line’s costs of compliance with the global sulphur cap, which mandates the use of fuel with a sulphur content of 0.5% instead of 3.5 %.
Maersk is pursuing the move amid expected increasing fuel costs the industry will face due to the new regulation, which are projected to reach USD 15 billion. Maersk Line alone anticipates it will have to pay over USD 2 billion more for fuel on annual basis.
“We fully support the new rules. They will be a significant benefit to the environment and to human health”, says Vincent Clerc, Chief Commercial Officer, A.P. Moller – Maersk A/S.
“The 2020 sulphur cap is a game changer for the shipping industry. Maersk preparations to comply are well underway and so are our customers’ efforts to plan ahead. 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.”
The BAF replaces Maersk Line’s 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.
Maersk Line’s BAF surcharge will be introduced on January 1, 2019, and it will be levied separately from the company’s freight rate.