A volatile environment
Bunker is one of the most important costs for a container shipping line.
IFO 380 price has shown strong fluctuations in the previous months. On top of the above a new IMO (International Maritime Organization) low sulphur regulation will be applicable to all container shipping companies as from 1st of January 2020. It will set a maximum sulphur content threshold of 0.5% for marine fuels over 100% of the sea distance for any maritime services.
To be compliant with this new regulation, CMA CGM will use low sulphur fuel (LSFO) and the cost per ton is expected to be significantly higher than IFO 380.
A simple and predictable mechanism
In order to ensure the sustainability & reliability of our services in this volatile environment, CMA CGM will introduce a new quarterly Bunker Adjustment Formula (BAF) for long term contracts starting from 1st of January 2019.
You will find here below all the key elements of this BAF:
BAF Application :
This new BAF formula will be applicable only on all contracts/quotations with at least 3-month validity starting as from January 1st, 2019. BAF to be applied on top of freight.
Existing 2018 contracts with BAF VATOS still valid during Q1 2019 will keep on running with former BAF formula.
No application of BAF on spot and short-term contracts/quotations with a validity of less than 3 months.
These contracts/quotations will be subject to EBS
Please refer to our latest EBS announcements (global & Taiwan additional)
BAF Formula:
Fuel Price per ton x trade coefficient
Fuel reference price:
- In 2019: CMA CGM will use one single IFO 380 reference price for all trades, based on major bunkering places (50% Singapore IFO 380, 40% Rotterdam IFO 380, 10% Houston IFO 380)
- In 2020: New LSFO; index to be determined in Q3 2019
BAF will be reviewed on a quarterly basis, with a one-month notice
| PERIOD | FUEL OIL PRICE | DATE OF PUBLICATION* | APPLICATION DATE |
|---|---|---|---|
| Q1 | Sept/Oct/Nov | As from December 1st | January 1st |
| Q2 | Dec/Jan/Feb | As from March 1st | April 1st |
| Q3 | Mar/Apr/May | As from June 1st | July 1st |
| Q4 | Jun/Jul/Aug | As from September 1st | October 1st |
*Leaving one-month notice for filing
Tiers of USD 25 have been set up in order to avoid BAF revision in case of limited variation of Fuel Oil price.
Trade Coefficient :
Trade Coefficient = Round Voyage Consumption of Fuel Oil (in ton) per trade divided by number of full TEU carried
An imbalance adjustment will be applied on some trades to adjust the “backhaul / weak leg” and the “headhaul / rich leg” coefficients.
Reefer Cargo :
A specific Reefer Consumption Surcharge will be implemented on top of BAF:
20% on top of Dry BAF
Later on, a specific Reefer BAF will be published: Dry BAF x 1.2
