Maersk Line has revealed that it will begin levying a new Bunker Adjustment Factor (BAF) surcharge on its customers at the start of next year. The Danish shipping giant says the additional charge will allow it to recover increases in fuel-related expenses that will come with the implementation of the 2020 sulphur cap.
Over 90 per cent of the global fleet is expected to switch to using compliant fuels – which contain 0.5 per cent sulphur or less – when the regulation comes into force. However, these fuels are significantly more expensive than their high-sulphur counterparts. Some industry sources estimate that the cost of compliance could be as much as $15bn, with Maersk anticipating that its additional fuel expenses will exceed $2bn.
The BAF is comprised of two key calculations: the fuel price, which is determined by the average fuel price in key global bunkering ports, and a trade factor that reflects the average fuel consumption on a given shipping lane.
When the tariff is introduced, it could result in price increases of up to $360 per single standard container on a route from the Far East to North Europe. Meanwhile, containers travelling from the Mediterranean to the Far East could incur additional costs of $293 each.
“The 2020 sulphur cap is a game changer for the shipping industry,” says Maersk’s Chief Commercial Officer, Vincent Clerc. “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.”
However, the freight industry has questioned the severity of the surcharge, with the British International Freight Association accusing Maersk of acting with transparent self interest.
"While the shipping operators may say that the new BAFs are needed to cover the cost of switching to low sulphur fuels or fitting exhaust ‘scrubbers’, rises of this magnitude are unjustified and could be construed as blatant profiteering by shipping lines determined to exploit the situation,” says Robert Keen, the organization’s director general.