The Covid-19 pandemic drove fuel demand significantly lower and the price of crude oil along with it, as a result we cut the fuel surcharge (Bunker Adjustment Factor (BAF) Surcharge) by 2% in May 2020. The price of crude oil has now recovered and is now more than double the level it was one year ago and as a result we will be increasing our BAF levels.
BAF Explained
BAF is based on Twenty-Foot Equivalent Units (TEU’s), it is used to smooth out the effect of oil price fluctuations on carrier costs. It periodically changes, typically monthly or quarterly.
Crude oil costs make up approximately half the cost of fuel (depending on price), refining, distribution, marketing, and taxes make up the other 50%. This is the very reason that if the price of crude oil drops 50% you do not see a corresponding 50% drop in gas prices.
BAF is also used as a pricing mechanism to adjust for various costs in the shipping industry.
Elenteny Imports began with the intention of simplifying freight costing, and providing predictable pricing. We work very hard to simplify the LCL rates to keep the pricing as consistent as possible in an ever-changing marketplace. In some months BAF will rise or fall and we do not change our prices.
Upcoming Increase in BAF rates
The BAF rates have now risen to a range that means we will be adjusting our April fuel surcharges up from 12% -> 14% for shipments to Oakland, 14%->16% for shipments to Seattle and 10% -> 12% for East Coast routes. This price change will take place for all LCL orders placed after April 12th. For FCL orders the price will be change will be effective on all new orders