The car transport shipping company Wallenius Wilhelmsen has introduced a new Bunker Adjustment Factor (BAF) that takes expensive green fuels into account.
“BAF2.0” is set to launch on 1 January 2025 and will increase the transparency of costs, consumption and emissions. The company expects its competitors to follow suit.
BAF is a pricing mechanism that adjusts freight rates based on fuel price fluctuations. To achieve net zero emissions by 2040, more clarity on the costs of alternative fuels is essential, Wallenius Wilhelmsen said. The company recently invested further in its fleet and took up the option for two more ships.
Delay leads to higher costs later on
“The revised BAF is an important step on our path to net zero emissions,” said Xavier Leroi, COO Shipping Services. “We believe that delaying the transition to net-zero fuels will only lead to higher costs later on.”
BAF2.0 will function as before and absorb the fluctuations in fuel prices, but will now also take into account a future fuel mix. The new factor thus ensures the predictability of the costs for the fuel mix during the transition to net zero.
Wallenius integrates several fuel types into a single charge. Fossil fuels such as VLSFO and MGO are to be gradually replaced by alternative substances such as bio-LNG and methanol.
Wallenius wants to lead the way for the industry
“With BAF2.0, we are taking a big step towards future-proofing,” continued Leroi. Wallenius’ bunker adjustment factor will ensure cost transparency in advance in the face of the energy transition. “We firmly believe that this is the right way forward for the industry.”
From 1 January 2025, BAF2.0 will apply to all new sea transports. According to Wallenius, the BAF2.0 fuel mix will be introduced gradually, starting with biofuel and LNG, followed by methanol, bio-LNG and ammonia. The aim is to manage cost adjustments while providing customers with clarity on the environmental and financial impact of net zero fuels. Eventually, only carbon-free fuels will be included in the Wallenius fuel mix. Until then, BAF2.0 will provide a comprehensive pricing framework that reflects fuel market conditions.
