In the midst of skyrocketing oil costs, Steamship Lines across the world are preparing to re-align the Bunker Adjustment Factor, or BAF for short, on trade lanes across the world. Recent announcements indicate an immenent emergency charge termed “Emergency Bunker Surcharge” or EBS for short. Global trade destinations outside the United States fell subject to EBS adjustments as early as June 1st 2018. Due to the protections afforded to United States importers through the Federal Maritime Commission, the EBS charges for US bound cargo cannot be implemented until July 1st 2018.
Communication within the market points to EBS increases on all shipping contracts, both fixed and FAK. Early filings will allow for increases of between $55 to $95 per TEU, and $110 to $120 per FEU above current base rates.
Steamship Lines adjust BAF quarterly. However, the cost for bunker fuel lags behind the cost of a barrel of oil as does consumer gasoline pricing. In April of 2018, U.S. Oil prices hit $70 a barrel for the first time since 2014. Riding the wake of controlled output reductions as well as a looming decision between US leadership and Iran, prices threaten to continue climbing. Industry experts cite several changes to environment, consumption and global factors that have made oil cost predictions very difficult for the foreseeable future.