Understanding the Fuel Surcharge | How it’s charged?

Fuel Surcharge,or Bunker Adjustment Factor,(BAF) .

Fuel Surcharge Interpretation

Fuel Surcharge refers to a surcharge imposed by a shipping company to compensate for the increase in fuel cost without adjusting the basic tariff, due to the increase in fuel price, which makes the fuel cost expenditure of the vessel exceed the fuel cost in the original transportation cost.

In addition, in the event of a sudden and significant increase in fuel prices after the fuel surcharge has been added, the shipping company will add Emergency Adjustment Surcharge (EAS) on top of the normal fuel surcharge.


Fuel Surcharge


Fuel Surcharge Charging Standard

Bunker surcharge is charged as a percentage of the basic rate on some routes, and a certain amount per freight ton on some routes. Each route has this fee, the standard is different, the price is also different.

The fee is usually charged per container and billed in US dollars (USD). Of course, this BAF can also be paid on delivery

In fact, BAF, CAF this kind of cost, the shipping company according to the shipment of different seasons to adjust, BAF this cost can be understood as, BAF and oil prices are related, CAF and exchange rates are related.

Bunker Adjustment Factor formula

Bunker surcharge = (fuel price – starting point oil price) × coefficient × transportation weight

Among them, fuel price refers to the type and price of fuel consumed by ships or aircraft in a specific route (e.g., high sulfur oil, 0.5% low sulfur oil and 0.1% low sulfur oil, etc.), starting point oil price refers to the price benchmark for the start of fuel surcharge, coefficients are set according to the market conditions and company strategies, and transportation weight refers to the weight of the cargo.


Fuel Surcharge


Fuel Surcharge Q&A

Q: How to declare fuel surcharge to customs?

A: Usually, when enterprises declare to the Customs, the amount of Bunker Adjustment Factor has already been determined and can be declared truthfully in the miscellaneous fees column of the customs declaration. Individuals who have not yet determined the fee when declaring to the Customs should apply to the Customs for tax reimbursement after confirming the amount with relevant documents and objective quantitative data.

Q: What documents do I need to provide to Customs for declaration?

A: Documentary information involving Bunker Adjustment Factor includes relevant transportation contracts, invoices, etc.


ocean bill of lading

Key Points:

  1. Fuel surcharge, as a component of freight and occurring before loading and unloading at the place of import, should be included in the duty-paid price of imported goods.
  2. Please prepare relevant transportation contracts, invoices and other supporting documents when declaring.

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