What are these three terms Bunker, Bunkering and Bunker Adjustment Factor (BAF) that we hear quite often in shipping circles..??

A bit of a historical background first.. Soon after its introduction into the industrialized world as a source of power, steam quickly became a dominant force in both land (locomotives) and sea transport (steamships)..

Steamships used the power of steam to travel and steam was generated by feeding coal into the furnaces on board the ship.. The storage containers for coal was known as a BUNKER..

Since coal was the original fuel for steamships, the term bunker became synonymous with fuel and therefore Bunker is simply nothing but FUEL (oil) used in ships..

There are various types of Fuel Oil and within the Fuel Oils, there are many classifications, standards and grades..

Few types of Fuel Oils are :

MGO (Marine gas oil), MDO (Marine diesel oil), IFO (Intermediate fuel oil) , MFO (Marine fuel oil), HFO (Heavy fuel oil) ..

Bunkers are supplied through various means such as bunker barges, pipelines, road tankers etc.. This depends on the port in question and the accessibility to the ship..

The act of supplying a ship with bunkers is known as bunkering..

A major portion of the ships operating cost is “bunkers”.. As you may have seen, oil prices are quite volatile, and therefore ship operators or owners maybe unable to calculate a consistent operating cost for their ships..

In order to counter the fluctuations in oil prices, the shipping lines charge a surcharge on top of the ocean freight, known as Bunker Adjustment Factor (BAF).. This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down..

In some trade lanes, BAF maybe included in the freight rate and may not be shown separately in you freight quotation or invoice..

So the next time you hear that a ship is in port for bunkering, you know that it is there just to fill up some fuel..

Simple, isn’t it, but be prepared to be charged a Bunker Adjustment Factor for the bunkers the ship carrying your cargo burnt.. 🙂