BAF Program Challenges

Navigating the marine fuel landscape is no easy task, especially as new challenges continue to shape the larger maritime industry. Current BAF programs are inconsistent, and do not reflect the realities of moving ocean freight — nor are they designed to effectively navigate this evolving marketplace. This creates distortion in shippers’ marine strategies:

 

BAFs Are Not Transparent

Shippers using a BAF program can’t actively manage their fuel spend strategy. By relying on BAF pricing mechanisms, they accept an inherently distorted strategy that doesn’t account for volatile market realities.

Changing Regulations Are Affecting Your BAF

Changing regulations elicit drastically different maritime industry responses, triggering inconsistency in the prices you pay to move goods. Emergency bunker surcharges, employment of new fuel types, and updating vessels to meet new standards all have vastly different price implications.

BAF Programs Are Inconsistent

For the same movements and levels of service BAFs can vary, with no explanation of how cost drivers like consumption, geography, and regulations all result in BAF pricing changes over time.

BAF Programs Lack Agility

Without direct line of sight into the data behind their freight movements, shippers cannot advocate for technological improvements that elevate their strategy. This results in practices that are static, inflexible, and without baseline.

Navigating a Volatile Marine Fuel Environment

With Breakthrough Marine Fuel Management, shippers combat the distorted practices of the existing marine fuel landscape. Our market-based approach considers fact-based consumption parameters, geography of freight movements, and regulation-driven price impacts to ensure you have the proper visibility into your international shipping network and marine fuel spend. This unlocks the door to continuous improvement opportunities that elevate your long-term marine freight strategy.

 

Join us for a live, 30-minute webinar on Tuesday, November 19 at 10:00am CT to discuss the distortions in the current marine fuel landscape, the impacts of the upcoming IMO 2020 regulations, and how you can take control using Breakthrough Marine Fuel Management.

IMO 2020 Sulfur Regulation

The International Maritime Organization (IMO) agreed to reduce the allowable sulfur content of marine fuel from 3.5 percent to 0.5 percent beginning January 1, 2020 – this change is commonly referred to as “IMO 2020” in the industry. The announcement of the significant decrease has and will continue to incite substantial action and investment across the petroleum refining and maritime industries in an effort to comply.

Additionally, current ECA/SECA regulations compounded with the effects of new sulfur requirements affect operations of ocean carriers while creating additional cost. These additional expenses may not be a true reflection of the cost to move your freight to market. As uncertainty in the maritime cargo industry grows, gaining transparency into the true cost of moving goods to market becomes imperative to effectively manage marine fuel spend. Unlike typical BAF programs, the Breakthrough Marine Fuel Management program will include a diversifying mix of fuel types emerging from regulatory changes.

Next Sea Change Webcast
Impacts of the IMO 2020 Regulation

The allowable sulfur content in bunker fuel consumed on the open seas is being reduced to 1/7 its existing level by IMO 2020 regulations, and shippers want to understand the impact to their supply chains. Fill out the form below to view our webcast, The Next Sea Change, to discover how fuel market dynamics will shift as IMO 2020 approaches and identify the challenges these new regulations will create for the supply chain.

Sign up for the Breakthrough Advisor Brief and additional market insights.