What is Bunker Adjustment Factor?
The bunker adjustment factor (BAF), also called bunker surcharge, is a surcharge added to ocean freight to reflect changes in the cost of marine fuel. Carriers calculate it from a published formula that combines a fuel price index for a period, the fuel consumption of a trade lane and the volume carried, and revise it monthly or quarterly. Since 1 January 2020 IMO regulations under MARPOL Annex VI have capped the sulphur content of ship fuel at 0.50 percent globally, and 0.10 percent in Emission Control Areas, and many carriers added separate low-sulphur components to cover the higher cost of compliant fuel. Since 2024 the EU Emissions Trading System has also applied to shipping, and carriers generally recover that cost through a separate emissions surcharge rather than the BAF. Air freight has an equivalent fuel surcharge, normally charged per kilogram.
Why it matters for forwarders
BAF can be a large share of the all-in ocean rate, so forwarders need to know whether a quote is all-in or base rate plus floating surcharges, and which BAF period applies. The applicable BAF is usually determined by the sailing or gate-in date rather than the booking date, and contracts should state this to avoid disputes when the surcharge changes mid-shipment. In US trades, carriers must publish surcharges in their tariffs, and increases cannot take effect earlier than 30 calendar days after publication. When passing BAF through to customers, use the carrier's actual figure for the relevant period and lane rather than a flat estimate. Review service contracts for whether BAF is fixed, indexed or included, because that choice determines who carries fuel price risk.