Investor Presentaiton
Bunker adjustment factor clauses:
Existing Charterparties: Any adjustment clauses referring to Heavy Fuel Oil
(HFO) should be reviewed, as post-2020 they may be illegal.
Future Charterparties: ensure that such clauses are in conformity with the new
types of fuel that will be supplied and used. Add bunker adjustment factor
clauses (BAF clauses)
■ BAF clauses help carriers hedge against the risk of bunker price volatility.
▪ When bunker prices significantly fluctuate, a carrier's ability to offer its
customers a stable base freight rate is reduced.
■ An issue here is that BAF clauses typically track against prices fixed on a
passed date (the bill of lading date in the clause above). They will not track
the present pricing reality at the time the bunkers are purchased
or stemmed.
■ If parties wish to track actual bunker costs during the voyage more closely,
they should consider incorporating Bunker Escalation and De-Escalation
clauses.
michaelkyprianou
Advocates Legal ConsultantsView entire presentation