Wallenius Wilhelmsen to introduce future fuels-fit fuel surcharge

November 18, 2024, by Naida Hakirevic Prevljak

Norwegian shipping and logistics company Wallenius Wilhelmsen has decided to launch a re-engineered bunker adjustment factor, BAF2.0, to prepare for future fuels on the path to net-zero emissions by 2040.

According to the company, BAF2.0 will “streamline and simplify the adaptation of alternative fuels.”

The bunker adjustment factor is a pricing mechanism used to adjust freight rates based on fuel price fluctuations. Wallenius Wilhelmsen’s BAF2.0 said it is not looking to reinvent the wheel but to improve it to fit a future that will include several fuel types like biofuel, bio-LNG, methanol and ammonia.

As explained, on the path to net-zero emissions by 2040, greater clarity around the cost of alternative fuels is essential. BAF2.0 will work as before capturing fuel price fluctuations, but now including a future fuel mix. It is expected to ensure 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 very low sulfur fuel oil (VLSFO) and marine gasoil (MGO) in favor of alternative fuels such as biofuel, bio-LNG, and methanol.

“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,” Xavier Leroi, COO Shipping Services at Wallenius Wilhelmsen, commented.

“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.”

The company said it 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 January 1, 2025, BAF2.0 will apply to all new ocean businesses.

Earlier this month, Wallenius Wilhelmsen exercised an option for two additional 11,700 CEU methanol dual-fuel Shaper class pure car and truck carriers (PCTCs) to be built in China. The vessels will be prepared for net-zero and future fuels and are set to reduce fuel consumption and emissions, according to the Norwegian firm.