Wallenius Wilhelmsen prepares for a net-zero future with a new multi-fuel price mechanism

Wallenius Wilhelmsen is launching a re-engineered bunker adjustment factor, BAF2.0, to prepare for future fuels on the path to net-zero emissions. BAF2.0 will increase the transparency of fuel cost, fuel consumption and emissions.

Bunker Adjustment Factor (BAF) is a pricing mechanism used to adjust freight rates based on fuel price fluctuations. On the path to net-zero emissions by 2040, greater clarity around the cost of alternative fuels is essential. The re-engineered bunker adjustment factor, BAF2.0, will give exactly that.

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

Preparing for a multi-fuel future

BAF2.0 will work as before capturing fuel price fluctuations, but now including a future fuel mix. BAF2.0 therefore ensures 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 VLSFO and MGO in favor of alternative fuels such as biofuel, bio-LNG, and methanol.

“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,” says Xavier Leroi, Chief Operating Officer Shipping Services at Wallenius Wilhelmsen.

Starting 1st January 2025, BAF2.0 will apply to all new ocean business.

BAF2.0 fuel mix will be phased in gradually, starting with biofuel and LNG, followed by methanol, bio-LNG, and ammonia. It will manage cost adjustments and ensure clarity on the environmental and financial impact of net-zero fuels.

Finally, only zero-carbon fuels will be in the fuel mix. By then, BAF2.0 will be a comprehensive pricing framework reflecting fuel market conditions and sustainability goals.

Creating fuel transparency

The road to net-zero will be complicated with new fuel mixes and regulations, BAF2.0 will help simplify that world.

“A re-engineered BAF prepared for future fuels will give our customers increased predictability of fuel costs in a landscape where fuel mix will only be more complicated. A new BAF also allows us, with our customers, to ensure compliance with environmental regulations as they become stricter,” says Pia Synnerman, Chief Customer Officer at Wallenius Wilhelmsen.

BAF2.0 ensures that future fuel costs are more transparent and fairly distributed.