Bunker fuel and the bunker adjustment factor
Vessel-days at sea, tonnes burned, BAF with a lag.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: bunker fuel and the bunker adjustment factor.Updated 5 November 2026
Part of project finance and infrastructure models, with the models, labs and guides around it.
What it does
Fuel follows the ships, not the boxes: vessels times the days in the year times the share at sea gives vessel-days at sea, times the tonnes burned a day, the fuel used, at the bunker price. A liner buys fuel for its chartered-in ships too, because a time charter leaves the fuel with the charterer. The bunker adjustment factor passes part of a change in the price on to customers against a reference price built into the freight rate, but on an earlier period’s price, so a rise costs the liner the unrecovered share and a year of the lag, and a fall can leave it recovering more than it spends.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 32–37: Share of vessel-days at sea, Fuel burned per vessel-day at sea, Bunker price, FY0, Bunker price growth, base case…
- Bunker, rows 6–10: Vessel-days at sea, Fuel burned, Bunker price, Fuel cost…
- Bunker, rows 13–19: Bunker price the BAF follows, Change from the reference price, BAF revenue, Fuel cost above the reference price…
What a reviewer looks for
- Fuel from liftings, so empty slots appear to burn nothing.
- The BAF as a full, immediate pass-through.
- Chartered-in ships’ fuel left to the owner, as it would be on a bareboat charter but not on a time charter.
Learn it, then build it
Vocabulary: Bunker Adjustment Factor (BAF).