Wallenius Wilhelmsen is launching a re-engineered bunker adjustment factor, BAF2.0, to prepare for future fuels on the path to net-zero emissions by 2040.
BAF2.0 is expected to streamline and simplify the adaptation of alternative fuels. Bunker Adjustment Factor (BAF) is a pricing mechanism used to adjust freight rates based on fuel price fluctuations. Wallenius Wilhelmsen says its BAF2.0 is not looking to re-invent the wheel, just improve it to fit a future that will include several fuel types like biofuel, bio-LNG, methanol and ammonia.
On the path to net-zero emissions by 2040, greater clarity around the cost of alternative fuels is considered essential. The re-engineered bunker adjustment factor, BAF2.0, should provide exactly that. BAF2.0 will work as before, capturing fuel price fluctuations, but now including a future fuel mix. BAF2.0 therefore ensures cost predictability of the fuel mix during the transition to net-zero fuels.
BAF2.0 integrates multiple fuel types into a single charge. Wallenius Wilhelmsen’s fuel mix will gradually phase out fossil fuels like VLSFO and MGO in favour of alternative fuel such as biofuel, bio-LNG, and methanol.
Xavier Leroi, COO Shipping Services, Wallenius Wilhelmsen said: “The re-engineered BAF is important in our net zero journey. We believe delaying the switch to net zero fuels will only increase costs later. We are taking a considerable step towards futureproofing with BAF2.0. In a world where the cost of the green transition is talked about everywhere, the multi-fuel BAF will give cost transparency upfront and at a fair level. We strongly believe this is the way forward for the industry.”
Wallenius Wilhelmsen strongly believes that if the industry carries the well-known BAF concept into the future with this re-engineered version, the path to the net-zero ambitions set by the industry will be simpler and more streamlined for both carriers and customers.
Starting 1 January 2025, BAF2.0 will apply to all new ocean business. The road to net-zero will be complicated with new fuel mixes and regulations, BAF2.0 can help simplify that world.
Pia Synnerman, Chief Customer Officer, Wallenius Wilhelmsen said: “A re-engineered BAF that is prepared for future fuels will give our customers increased predictability of fuel costs in a landscape where fuel mix will only be more complicated. A new BAF also allows us, with our customers, to ensure compliance with environmental regulations as they become stricter.”
BAF2.0 will help both Wallenius Wilhelmsen and its customers to ensure regulatory compliance as several regulations mandate the use of alternative fuels. BAF2.0 ensures that future fuel costs are more transparent and fairly distributed.
Image: Wallenius Wilhelmsen PCTC (source: Wallenius Wilhelmsen)
