Voyage Charter Bunker Price Adjustment Calculator

Formula, assumptions, and limits

A voyage charter bunker price adjustment is the amount owners or charterers pay when the bunker price on the first day of loading leaves an agreed band around a base price, calculated on the agreed consumption per voyage. The standard wording is the BIMCO Bunker Price Adjustment Clause 2004, which BIMCO publishes for voyage charters and contracts of affreightment (COAs).

Formula

• A: adjustment in USD. Positive is payable by charterers to owners, negative by owners to charterers.
• P: bunker price on the first day of loading, USD per metric ton, at the port, supplier or published index named in the clause.
• P_U and P_L: the upper and lower prices written into the clause, USD per metric ton.
• P_0: the base price the contract is concluded on, with P_L no higher than P_0 and P_0 no higher than P_U. With no band, both edges equal P_0.
• Q: the agreed bunker consumption per voyage in metric tons, the last blank of the clause.

That equation is reading A. Reading B pays the full move from the base once the price leaves the band:

Derivation

The operative sentence of the 2004 clause reads: “If the bunker price per metric ton at _____ on the first day of loading is higher than USD _____ or lower than USD _____, any amount in excess of such increase or decrease shall be payable to Owners or Charterers as the case may be.” The trigger is a price outside the two stated figures. The payment is “any amount in excess of such increase or decrease”, which most naturally means the part of the move beyond the stated figure, so the band behaves like a deductible. The clause then says “The agreed bunker consumption for each voyage is as follows”, and a per-ton price difference only becomes a sum of money when multiplied by a tonnage, which is why Q multiplies the difference. The clause never states that multiplication in terms, so draft it expressly.

Assumptions

• One price observation, on the first day of loading, fixes the adjustment for the voyage. Price moves after that date do not count.
• Q is the agreed figure in the clause, not the tonnes actually burned.
• One fuel grade. The clause has a blank for gas oil, diesel or fuel oil and a blank for the grade; a ship pricing two grades needs one calculation per grade.
• USD per metric ton throughout, as the 2004 clause is written.

Worked example

Inputs are hypothetical except the consumption rates. A Capesize on a Western Australia to China round voyage, 12.5 days laden and 12.5 days in ballast at 12 knots, burning 36 t/day laden and 29 t/day in ballast, the consumption the Baltic C5TC(182) standard vessel description prescribes at 12 knots. Agreed consumption: 12.5 x 36 + 12.5 x 29 = 450 + 362.5 = 812.5 t.

Base price USD 600 per tonne, band USD 575 to 625, price on the first day of loading USD 660.

• Reading A: (660 - 625) x 812.5 = USD 28,437.50, payable to owners.
• Reading B: (660 - 600) x 812.5 = USD 48,750.00, payable to owners.

Over 170,000 t of cargo, reading A is USD 0.167 per tonne and reading B USD 0.287 per tonne. On a hypothetical base freight of USD 9.50 per tonne those are 1.76% and 3.02% of freight. Fuel intensity is 812.5 / 170,000 = 0.0048 t of fuel per tonne of cargo, so each USD 10 per tonne move in the bunker price moves freight by about USD 0.05 per tonne of cargo. The Load the worked example button sets these inputs.

Edge cases and limits

• The reading B cliff. Under reading B, a price of USD 625 pays nothing and a price of USD 626 pays (626 - 600) x 812.5 = USD 21,125.00. Under reading A the same USD 1 step pays USD 812.50. A band edge that triggers a jump of that size invites argument over the price assessment on the day, which is one practical reason to prefer reading A or to state the reading in the fixture.
• No band. With both edges left at the base price, readings A and B give the same result.
• A COA with many voyages. The clause prices each voyage on its own first day of loading and its own agreed consumption. Whether that date works for a multi-voyage COA is left to the parties.
• Rise Clause mode. The BIMCO Bunker Rise Clause for Voyage Chartering pays only rises, compares the price owners actually paid with the price in force on the charter date, and applies to the quantity consumed on the contracted voyages, not an agreed figure. Its footnote allows “1,000 kilos or 2,240 lbs” as the ton, so check which ton the fixture used before comparing it with a metric-ton index.

Regulatory basis

The BIMCO Bunker Price Adjustment Clause 2004 is a standard clause, not a regulation, tagged by BIMCO for voyage charters and contracts of affreightment. Its footnotes require the parties to name the fuel type and to agree the port or place, “supplier or published index”. The BIMCO Bunker Rise Clause for Voyage Chartering is the one-way alternative, noted by BIMCO as intended for contracts of several voyages. Neither is printed in GENCON 1994: the form has no bunker clause, and the escalator goes into Box 26, additional clauses.

Common errors

1. Paying the full move under reading A wording. Charging (P - P_0) x Q when the clause is read as reading A overstates the claim by the distance from the base to the band edge times Q: (625 - 600) x 812.5 = USD 20,312.50 on the worked voyage.
2. Pricing actual consumption. The 2004 clause prices the agreed consumption. Tonnes burned above it are claimed under the speed and consumption terms.
3. Using the wrong price date or source. The date is the first day of loading and the source is the one named in the clause. A monthly average or a different port is a different contract.
4. Applying it to a time charter. Under NYPE 2015 the charterer buys the bunkers (clause 9), so no adjustment arises.
5. Mixing tons. The Rise Clause can be filled in on 2,240 lb long tons; the 2004 clause is per metric ton.

How to use this calculator

1. Choose the BIMCO Bunker Price Adjustment Clause 2004 or the BIMCO Bunker Rise Clause for Voyage Chartering.
2. Enter the base bunker price from the clause and, for the 2004 clause, the upper and lower band edges. Leave the edges blank if the clause has no band. The calculator checks that the lower edge is no higher than the base and the base no higher than the upper edge.
3. Enter the bunker price on the first day of loading at the agreed port, supplier or index, or for the Rise Clause the price owners actually paid.
4. Enter the agreed consumption per voyage, or switch to the helper and derive it from laden and ballast sea days and daily consumption.
5. Optionally enter the cargo quantity and base freight to express the adjustment per tonne of cargo and as a share of freight.
6. Read the adjustment in USD, who pays it, and the reading A and reading B results side by side.

Worked scenarios: a price fall under each clause

Keep the worked voyage (base USD 600, band USD 575 to 625, 812.5 t agreed) and let the price on the first day of loading fall to USD 540 instead.

The 2004 clause is symmetric, so charterers recover on a fall exactly what owners would have recovered on an equal rise. The Rise Clause protects owners only. A charterer offered the Rise Clause gives up any recovery on a falling market, and that is worth pricing into the freight rate before fixing.

Where to find each input

• Base price, band edges, fuel type and grade: the completed clause in the charter party, usually as an additional clause under GENCON 1994 Box 26 or the rider of the form in use.
• Price source: the port, supplier or published index named in the clause’s second blank. Record the assessment for the first day of loading and keep the publication as evidence.
• Agreed consumption: the last blank of the 2004 clause. When negotiating it, the owners’ speed and consumption description and recent noon reports are the usual starting points; the helper multiplies laden and ballast days by the daily rates.
• Rise Clause price paid: the owners’ bunker invoices for the fuel consumed on the contracted voyages, which the clause requires owners to produce with their account.
• Cargo quantity and freight: the bill of lading quantity and the freight rate in the fixture recap.

When to use this calculator vs the related ones

Use this page when a tramp voyage charter or COA carries a BIMCO-style bunker price clause. Two neighboring calculations are often confused with it.

Liner BAF. A container line’s bunker adjustment factor is a tariff surcharge worked as a reference fuel price multiplied by a trade factor for the lane, charged per container. It has no first day of loading and no agreed voyage consumption, so this calculator does not model it. To add a quoted liner BAF to a freight quote, use the ocean freight cost calculator.

Voyage bunker cost. Before fixing, owners estimate what the voyage will burn and what it will cost. That estimate belongs in the voyage bunker cost calculator, whose output is a reasonable basis for negotiating the agreed consumption Q entered here.

Time charters. There is nothing to adjust: the charterer buys the fuel. NYPE 2015 clause 9 settles bunkers on delivery and redelivery, and clause 12 governs speed and consumption. The NYPE 2015 time charter form article covers both.

Limitations

• The calculator applies one clause to one voyage and one fuel grade. A COA needs one run per voyage, and a two-grade ship needs one run per grade.
• It does not decide between reading A and reading B. It shows both, and the fixture wording decides.
• It does not model liner BAF, EU ETS allowance costs, or the BIMCO ETS clauses for voyage charter parties, which are separate mechanisms.
• It does not check whether the named price source published a price on the first day of loading, or what happens if it did not; the clause is silent on that.
• Laytime, demurrage and deviation do not change the result. GENCON 1994 clause 7 demurrage runs at the Box 20 rate independently of freight.

About This Voyage Charter Bunker Price Adjustment Calculator

On the worked Capesize voyage, the gap between the two readings of one sentence in the BIMCO 2004 clause is USD 20,312.50. That figure is why this calculator shows both readings instead of picking one, and why the most useful thing a broker can do with the clause is state the reading in the recap.

The calculator applies the clause as written: a base price, an upper and a lower price, a single price observation on the first day of loading at a named source, and an agreed consumption per voyage. It reports the adjustment in USD with its direction, then scales it to cargo and freight so the number can be compared with the freight rate it adjusts. The one-way Bunker Rise Clause is included because BIMCO still lists it among its current clauses and it behaves differently on a falling market.

The companion bunker adjustment factor article on Shipping-Wiki covers the clause history, the liner BAF methods and the charter party context in full. The voyage charter party and GENCON charter party articles cover the forms the clause is added to.

Further reading

• Bunker adjustment factor (Shipping-Wiki)
• Voyage charter party (Shipping-Wiki)
• GENCON charter party (Shipping-Wiki)
• NYPE 2015 time charter form (Shipping-Wiki)
• Voyage bunker cost calculator
• Ocean freight cost calculator

Test cases this calculator passes

Every build of this site runs these cases through the calculator above and stops the release if any figure moves outside its tolerance. Load a case to put its inputs into the calculator.

Frequently asked questions

How is a bunker price adjustment calculated under a voyage charter?

Under the BIMCO Bunker Price Adjustment Clause 2004 the parties agree a base bunker price, an upper and a lower price, a named port or index, and an agreed consumption per voyage. If the price on the first day of loading is above the upper price or below the lower price, the amount in excess is paid to owners or charterers as the case may be. On reading A the payment is the price beyond the band edge times the agreed consumption.

Does the BIMCO 2004 clause pay the full price move or only the move beyond the band?

The clause says 'any amount in excess of such increase or decrease', which on its words favors paying only the move beyond the band edge (reading A). The words can also be read as paying the full move from the base price once the price leaves the band (reading B). The clause does not settle it, so the fixture should state which applies. The calculator shows both.

Is there a bunker adjustment factor in a time charter?

No. Under a time charter the charterer buys the fuel, so there is nothing to adjust. NYPE 2015 clause 9 deals with bunkers on delivery and redelivery and clause 12 with speed and consumption; fuel price risk sits with the charterer throughout.

Does GENCON 1994 contain a bunker escalation clause?

No. The word 'bunker' does not appear in the GENCON 1994 form. A bunker price clause such as the BIMCO 2004 clause is added in Box 26, additional clauses. Clause 17 of GENCON 1994 is the war risks clause (Voywar 1993), not a bunker clause.

What is the BIMCO Bunker Rise Clause for Voyage Chartering?

A one-way clause: if the price actually paid by owners for the quantity consumed on the contracted voyages is higher than the price in force on the date of the charter, charterers pay the difference on production of owners' account. It pays rises only, has no band, and BIMCO notes it is intended for contracts of several voyages.

Does the bunker price adjustment cover a ship that burns more fuel than agreed?

No. The 2004 clause adjusts for price against an agreed consumption figure written into the clause. A ship that burns more than that figure is a performance question, not a price adjustment, and the extra tonnes are for owners' account unless the contract says otherwise.

How much does a USD 10 per tonne bunker move change freight per tonne of cargo?

Divide the agreed consumption by the cargo quantity to get fuel intensity, then multiply by the price move. On the worked Capesize voyage, 812.5 t of fuel for 170,000 t of cargo is 0.0048 t of fuel per tonne of cargo, so a USD 10 per tonne fuel move shifts freight by about USD 0.05 per tonne of cargo.

Is the adjustment affected by demurrage?

No. Demurrage under GENCON 1994 clause 7 is payable at the Box 20 rate and runs independently of freight and of any bunker price adjustment to freight. The 2004 clause prices the agreed voyage consumption, not port waiting time.

Which bunker price should be used on the first day of loading?

The one the clause names. The 2004 clause leaves blanks for the fuel type (gas oil, diesel or fuel oil), the grade, and the port or place, and its footnote says the supplier or published index is to be agreed between the parties. A price from any other source is not the contract price.