Bunker Adjustment Factor

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Bunker Adjustment Factor

An increase in a shipping rate as the result of increased oil prices. Because higher oil prices add to expenses, a shipper may set a bunker adjustment factor so as not to reduce profits. Each shipping company sets its own bunker adjustment factor; regulators monitor BAFs so collusion does not take place.
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Cariou and Wolff (2006) studied the relationship between bunker adjustment factors and bunker prices in Europe and Far East shipping markets.
An Analysis of Bunker Adjustment Factors and Freight Rates in the Europe/Far East Market (2000-2004).