Bunker Adjustment Factor (BAF): Meaning and Calculation

Author:

Dmitry

Updated:

September 29, 2026

A bunker adjustment factor (BAF) is a surcharge that shipping lines add to ocean freight to cover changes in the price of ship fuel. It moves up and down with fuel prices, while the base freight rate stays fixed for the contract period.

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This guide explains how BAF is calculated, who pays it, how often it changes, and how it differs from other surcharges. It is written for shippers, freight forwarders, and logistics students reading ocean freight quotes.

Bunker adjustment factor (BAF) surcharge in ocean freight shipping

What Is the Bunker Adjustment Factor (BAF)?

The bunker adjustment factor is the floating fuel component of an ocean freight charge. Carriers set it from a published fuel price index and review it periodically, so shippers pay more when fuel rises and less when it falls.

“Bunker” is the shipping term for a ship’s fuel, and bunkering is the process of loading it. Fuel is one of the largest running costs of a ship, which is why carriers separate it from the base freight rate.

BAF also appears under other names, depending on the carrier and trade:

Bunker surcharge (BSC)
Fuel adjustment factor (FAF) or fuel surcharge
Bunker contribution
Standard bunker adjustment factor (SBF)

In container shipping, BAF is usually quoted as a fixed amount per container, per TEU or per 40-foot unit. Some ferry and short-sea operators quote it as a percentage of the freight rate instead.

Who Charges BAF and Who Pays It?

The shipping line charges BAF to whoever pays the ocean freight. Under the sales contract, that is usually the seller for CFR, CIF, and delivered terms, and the buyer for FOB, FCA, and EXW terms.

Freight forwarders pass the carrier’s BAF on to their customers, either as a separate line or inside an all-in rate. Smaller shippers often receive an all-in price that already includes BAF, which avoids reconciling several surcharges on each invoice.

Large shippers with annual service contracts usually see BAF as a separate, index-linked line. That lets them fix the base freight for a year while fuel cost follows the market.

How Is BAF Calculated?

Most container lines calculate BAF as the average fuel price over a reference period multiplied by a trade factor. The trade factor is the average fuel burned per container on that trade route.

BAF per container = Average fuel price (USD/tonne) × Trade factor (tonnes of fuel per container)

Maersk adopted this formula from 1 January 2019, and other carriers use similar structures. The trade factor reflects transit time, the fuel efficiency of the ships deployed, and trade imbalance, since empty containers must also be moved back.

Where Does the Fuel Price Come From?

Carriers use a published bunker price index rather than their own purchase invoices. Since the IMO 2020 sulphur cap, the reference fuel is usually very low sulphur fuel oil (VLSFO) with a maximum of 0.50% sulphur.

For example, Maersk’s BAF effective 1 January 2026 used an average Platts VLSFO price of USD 461.54 per tonne. That average covered the three months from 26 August to 25 November 2025.

What Is the Trade Factor?

The trade factor converts a fuel price into a cost per container. Long, slow routes with large imbalances have high trade factors, while short, balanced routes have low ones. Carriers publish their BAF per trade, but rarely publish the trade factor itself.

As an illustration, take a trade factor of 0.6 tonnes per 40-foot container and VLSFO at USD 460 per tonne. BAF would then be about USD 276 per container. For background on how much fuel ships burn, see cargo ship fuel consumption.

How Do Threshold-Based BAF Clauses Work?

Some contracts, particularly in bulk and project shipping, use a base price and trigger instead. The freight rate moves by an agreed amount for every dollar the index moves above or below the base price.

One published example adjusts the freight by USD 0.125 for every USD 1.00 change in the bunker index, measured on the bill of lading date. The clause must name the index, the port, the fuel grade, and the pricing date to avoid disputes.

How Often Does BAF Change?

BAF is reviewed monthly or quarterly, depending on the carrier and trade. The new rate is based on fuel prices from an earlier reference period, so BAF always lags the fuel market by one to three months.

Maersk, for example, reviews most trades quarterly and announces new rates about a month before they take effect. When fuel prices spike between reviews, carriers sometimes add a temporary emergency bunker surcharge (EBS) on top of the normal BAF.

What Factors Affect the BAF Rate?

The main factors are the fuel price index, fuel grade, route length, ship efficiency, trade imbalance, and container type. A change in any of these changes the BAF charged per container.

Fuel price: the biggest single driver, taken from a published VLSFO or other bunker index.
Fuel grade: low sulphur fuel costs more than high sulphur fuel oil. Ships in emission control areas must burn 0.10% sulphur fuel, which costs more again.
Route length and transit time: longer voyages burn more fuel per container.
Ship size and efficiency: large, modern ships burn less fuel per container than older, smaller ones.
Trade imbalance: the fuel cost of repositioning empty containers is loaded onto the head-haul direction.
Container type: carriers publish separate BAF rates for dry and reefer containers.

Reefer BAF is usually higher than dry BAF. A reefer container draws power from the ship’s generators throughout the voyage, which adds fuel consumption on top of propulsion.

What Types of BAF Are There?

There are three common BAF arrangements: floating, fixed, and locked-in. They differ in who carries the fuel price risk between reviews, and shippers choose between them when negotiating a service contract.

BAF type	How it works	Who carries fuel risk	Suits
Floating BAF	Changes at each monthly or quarterly review	Shipper	Shippers who want to pay market fuel cost
Fixed BAF	A set bunker charge regardless of fuel price moves	Carrier	Shippers who need a predictable landed cost
Locked-in BAF	Agreed in advance and held for a set period, often a year	Carrier, for the locked period	Annual contracts with stable budgets

Carriers usually price fixed and locked-in BAF above the expected floating level, because they take on the fuel risk. Shippers are effectively paying for price certainty.

How Did IMO 2020 Change BAF?

IMO 2020 cut the global fuel sulphur limit from 3.50% to 0.50% on 1 January 2020. Most ships switched to more expensive VLSFO, and carriers rebuilt their BAF formulas around low sulphur fuel prices.

The limit is set by MARPOL Annex VI Regulation 14. IMO regulates the fuel, not the surcharge; each carrier decides how to recover the extra cost through its own BAF.

Ships fitted with exhaust gas scrubbers can still burn cheaper high sulphur fuel oil. Carriers generally charge BAF on the compliant-fuel index regardless of which fuel a particular ship burns.

Is BAF the Same as an Emissions Surcharge?

No. BAF covers the price of fuel, while emissions surcharges cover the cost of carbon regulations. Since 2024, container lines have added separate surcharges to recover the cost of the EU Emissions Trading System and, from 2025, FuelEU Maritime.

Maersk, for example, bills these as an emissions surcharge per container, separate from BAF. For how the carbon costs arise, see the EU Emissions Trading System in shipping.

How Is BAF Regulated?

No international body sets BAF. Each carrier sets its own formula and rates, subject to competition law and, in some countries, tariff publication rules. Shipping lines can no longer agree a common BAF on trades to and from the EU.

Until 2008, liner conferences set common surcharges, including BAF, for all their member lines on a trade. The EU repealed the conference block exemption with effect from 18 October 2008, making that collective price-setting illegal on EU trades.

On the transpacific, the Transpacific Stabilization Agreement published a voluntary guideline bunker formula for its members. It stopped publishing the formula in 2017 and cancelled its agreement with the US Federal Maritime Commission in February 2018.

How Does BAF Differ From CAF and Other Surcharges?

BAF adjusts freight for fuel prices, while the currency adjustment factor (CAF) adjusts it for exchange rate movements. Both are floating surcharges added to the base rate, alongside several others on a typical ocean freight invoice.

Surcharge	What it covers
BAF (bunker adjustment factor)	Changes in fuel prices
CAF (currency adjustment factor)	Exchange rate movements against the billing currency
EBS (emergency bunker surcharge)	Sudden fuel price spikes between BAF reviews
LSS / ECA surcharge	Extra cost of 0.10% sulphur fuel in emission control areas
EMS / ETS surcharge	EU ETS and FuelEU Maritime compliance costs
PSS (peak season surcharge)	High demand and tight capacity in peak months

Is BAF Negotiable?

The BAF level is set by the carrier’s formula and is rarely negotiable on a spot booking. In a service contract, shippers can negotiate how BAF works: floating or fixed, the index, and the review period.

Before signing, shippers should check these points in the contract’s BAF terms:

The fuel price index and fuel grade used
The reference period and how often BAF is reviewed
Whether BAF is quoted per container, per TEU, or as a percentage
Separate rates for reefer and special equipment
Whether emergency bunker and emissions surcharges can be added on top
Which date sets the BAF for a shipment: booking, gate-in, or bill of lading date

Frequently Asked Questions

What does BAF mean in shipping?

BAF stands for bunker adjustment factor, a surcharge that shipping lines add to ocean freight to cover changes in fuel prices. It is reviewed monthly or quarterly and quoted per container or as a percentage of freight.

How is BAF calculated?

Most container lines multiply the average price of a bunker fuel index over a reference period by a trade factor. The trade factor is the average fuel burned per container on that route, including empty repositioning.

Who pays the bunker adjustment factor?

BAF is paid by whoever pays the ocean freight. Under CFR, CIF, and delivered Incoterms that is usually the seller, and under FOB, FCA, and EXW it is usually the buyer.

Is BAF negotiable?

The BAF rate itself is set by the carrier’s formula and is rarely negotiable on spot bookings. In a service contract, shippers can negotiate the mechanism, such as a fixed or floating BAF and the index used.

What is the difference between BAF and CAF?

BAF adjusts freight for changes in fuel prices, while CAF, the currency adjustment factor, adjusts it for exchange rate movements. Both are surcharges added on top of the base freight rate.

What is an emergency bunker surcharge?

An emergency bunker surcharge is a temporary charge carriers add when fuel prices rise sharply between regular BAF reviews. It is usually withdrawn once the next scheduled BAF catches up with the market.

Is BAF the same as a fuel surcharge?

Yes, in practice. Fuel surcharge, bunker surcharge, and fuel adjustment factor are other names for the same fuel-linked charge, although carriers define and calculate it differently.