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Maersk Line introduces new BAF formula

Maersk Line introduces new BAF formula

Copenhagen: Maersk Line has introduced a new formula for its floating BAF (Bunker Adjustment Factor) aimed at increasing transparency in the charges imposed due to sky rocketing bunker prices. "Today, we only recover approximately 55% of the bunker expenses via BAF surcharges," says Vincent Clerc, Vice President for Pacific Services. "Naturally, this poses a significant exposure to Maersk Line, and traditionally we have tried to recover this via rate increases".

According to the Line, Bunker prices have tripled within the last three years and now constitute nearly half of the total vessel costs, up from 20% ten years ago.

"With Maersk Line's BAF formula we will create more transparency, and our customers will experience a simple and fair way of applying BAF. Amongst our customers, we see an increased understanding and acceptance of BAF as a floating mechanism, and our customers increasingly accept that we must share the extraordinary costs in a just way," Clerc adds.

The formula builds on elements such as fuel consumption, transit time, and imbalances of container flows. However, as only changes in the oil price entail changes in the BAF level, customers will only pay the variation in cost, and will benefit from downward trends as the bunker price fluctuates.

Maersk's various trades will implement the new formula separately, beginning the first quarter of 2008. The company expects all its trade routes to have made the transition by 1 January 2009.  [23/01/08]