What is Bunker Adjustment Factor (BAF)

What is Bunker Adjustment Factor (BAF) Ans :This adjustment is applied to cover variations in world oil fuel costs set by the shipping line head offices The BAF has been quite high over the last 12 months due to the huge increase in world oil prices. In fact the shipping lines instigated a “Bunkerage Surcharge”, which has been steadily decreasing due to the oil prices have fallen and staying low. Suggestion 3: The latest increase is a result of Sept 11 and the US involvement in the Afghan war. This surcharge should be withdrawn soon, as it can no longer be justified because of the success of the US in this conflict. If is not it should be a negotiating issue. Normally BAF is very difficult to negotiate and usually is not worth the effort, unless there are significant worldwide events as mentioned above.