Bunker surcharges explained: BAF, LSS, ETS and FuelEU on your freight invoice

Lashed & Secured editorial team · October 2026 · 6 min read

The ocean freight rate is only part of the bill. On most sea freight invoices there's a second block of lines underneath it: BAF, LSS, ETS, FuelEU, EES, FFF and more. Together they can add a big chunk to the cost of moving a box or a breakbulk piece, and they change every month or quarter.

Here's what each one is, how carriers work them out, and how to check you're paying the right amount.

Why fuel gets its own line

Fuel is one of the biggest running costs of a ship. Rather than re-price every contract when oil moves, carriers split fuel out into a separate surcharge that floats up and down with the market. That way the base rate can stay fixed for a contract period while the fuel part follows the price at the pump.

Bunker prices move for the same reasons oil does, plus some of their own: crude prices, refinery output, regional supply and conflict. On 9 October 2026 Ship & Bunker showed very low sulphur fuel oil (VLSFO) at about US$890 a tonne in Singapore and about US$715 in Rotterdam, a gap of roughly US$175. Prices move daily, so treat these as a snapshot. The route a ship takes matters too. Going round the Cape of Good Hope instead of through Suez burns far more fuel, and that has fed into surcharges since late 2023. Some services are now returning to Suez, but the return is partial and carriers say it could be reversed.

The biggest driver in 2026 has been disruption around the Strait of Hormuz. According to Ship & Bunker data reported by Kuehne+Nagel, the average VLSFO price across the top 20 bunkering hubs was US$882 a tonne on 28 September 2026, up about 30% from the early-July low and 69% on a year earlier. Constrained flows through the strait have hit Asian and Middle East suppliers harder than the Atlantic basin, which is one reason the Singapore–Rotterdam gap is much wider than it was before the crisis. Expect BAF levels to reflect this for as long as the disruption lasts.

BAF: the bunker adjustment factor

BAF is the classic fuel surcharge. Carriers use different names for it, such as BAF, bunker recovery charge, fossil fuel fee (FFF) or emergency bunker surcharge, but the idea is the same.

Maersk publishes its method, and it's a good example of how most of them work:

BAF = trade factor × fuel price

• Fuel price is the quarterly average of Platts prices for delivered VLSFO (0.5% sulphur) in Rotterdam, Singapore and Balboa.
• Trade factor is how many tonnes of fuel the carrier reckons each container uses on that trade. It allows for distance, ship size, speed and the imbalance between full headhaul legs and emptier backhauls. It's reviewed once a year.

Maersk reviews its BAF every quarter, but only changes it if the fuel price has moved by at least US$10 a tonne. For contracts longer than three months it uses its fossil fuel fee instead, which works the same way but is revised every quarter without that trigger.

So if your BAF jumps, it's either because fuel went up last quarter or because the trade factor was reset at the start of the year. It's worth knowing which.

LSS: the low sulphur surcharge

Since 1 January 2020, IMO rules have limited the sulphur in ship fuel to 0.50% worldwide. In emission control areas (ECAs) the limit is 0.10%. These include the North Sea, the Baltic, the North American coasts and, since 1 May 2025, the whole Mediterranean. Cleaner fuel costs more, so carriers brought in low sulphur surcharges (LSS) or ECA surcharges.

Many carriers have since rolled LSS into their BAF, because VLSFO is now the standard fuel. Others still show an ECA or LSS line for the extra 0.10% fuel burned inside those zones. Watch for both appearing on the same invoice when the BAF already covers it.

EU ETS: paying for carbon in Europe

Since 2024, shipping has been part of the EU Emissions Trading System. Carriers have to buy and hand in an allowance (an EUA) for each tonne of CO₂ their ships emit on voyages in scope. The bill was phased in:

• 40% of 2024 emissions
• 70% of 2025 emissions
• 100% of emissions from 2026 onwards

It covers 100% of emissions on voyages between EU ports and while ships are in EU ports, and 50% of emissions on voyages between the EU and a non-EU port. From 2026 it also counts methane and nitrous oxide, not just CO₂. ("EU" here includes the European Economic Area countries such as Norway and Iceland.)

The allowance price sets the surcharge. EUA prices have been volatile: the benchmark December 2026 contract settled at about €84 a tonne on 5 October 2026 after the annual compliance deadline, and had recovered to about €87 by 9 October. Carriers pass this on as an ETS or emissions surcharge, usually set every quarter. For example, ONE's Europe Environment Surcharge for October to December 2026 is US$110 per 20ft and US$220 per 40ft for dry containers from Asia/Oceania to Europe (the "Dry" column of ONE's tariff), and US$72/US$144 for dry containers within Europe. The same table charges live reefers more, at US$210/US$420 from Asia/Oceania to Europe, because they use more fuel to power the reefer units.

UK ETS: the new one for UK cargo

From 1 July 2026, the UK ETS covers shipping too. It applies to ships of 5,000 gross tonnes and above on voyages between UK ports, and to emissions while ships are in UK ports, including international ships at berth. International legs to and from the UK aren't covered yet, but the government has said it's considering them.

Carriers have folded this into their existing emissions surcharges. Maersk applies UK ETS alone on intra-UK and UK–rest of world trades, and a combined EU ETS, FuelEU and UK ETS charge on UK–EU trades. ONE has extended its surcharge to all cargo in and out of the UK. If you ship through UK ports and only saw an EU ETS line before July, expect it to change.

FuelEU Maritime: cleaner fuel, quietly costing more

FuelEU Maritime started on 1 January 2025. Instead of pricing carbon, it limits how carbon-heavy a ship's fuel can be over a year, for ships over 5,000 gross tonnes calling at EU ports. The limit tightens over time:

• 2% cleaner than the 2020 baseline from 2025
• 6% from 2030
• 14.5% from 2035
• 80% by 2050

Carriers meet it by blending in biofuels or LNG, pooling ships together, or paying penalties. All of these cost money, so most carriers combine FuelEU with ETS into one quarterly emissions surcharge. Grimaldi and Hapag-Lloyd both do this, for example.

What's coming: a global carbon price?

The IMO has been negotiating a worldwide Net-Zero Framework that would put a price on shipping emissions everywhere. A vote in October 2025 was adjourned, and talks continue at MEPC 85 from 30 November to 3 December 2026, with the adjourned adoption session resuming on 4 December. Nothing global applies yet, but if it's adopted, expect another surcharge line, or a reshuffle of the existing ones.

Breakbulk and project cargo

On liner breakbulk and multipurpose services, bunker is often charged per freight tonne (whichever is greater of weight or measurement), or built into an all-in rate with a bunker clause that lets the carrier adjust it if fuel moves past a set level. On a voyage charter, the owner normally pays for fuel but may include a bunker escalation clause. On a time charter, the charterer pays for the fuel directly. Read the fuel clause in your booking note or charter party before you compare offers.

How to check them on your invoice

1. Which surcharges are listed? Match every line to the carrier's published tariff. Most carriers publish BAF and emissions surcharges on their website each quarter.
2. Which date sets the rate? Some carriers use the sailing date, others the gate-in or bill of lading date. A box gated in on 30 September but sailing on 2 October can fall into the next quarter.
3. Is anything charged twice? LSS on top of a BAF that already includes low sulphur fuel, or two different emissions lines covering the same thing.
4. Does the route match? A 50% EU ETS charge only makes sense if the voyage touches an EU port. UK ETS only applies to the UK part.
5. Is it the right equipment type? Reefer, flat rack and open top surcharges often differ from dry box rates.
6. Currency and exchange rate. Surcharges are usually set in US dollars or euros, and converted on the invoice.

What to ask your forwarder

• Is this rate all-in, or "subject to" BAF and emissions surcharges at the time of shipment?
• Which quarter's surcharges are included, and what happens if the shipment slips into the next one?
• Can you show me the carrier's published tariff for each surcharge?
• If the service switches between Suez and the Cape, will any surcharge change?
• For breakbulk: is bunker per freight tonne or lump sum, and is there an escalation clause?

None of these questions are awkward. A good forwarder will have the answers to hand, and asking them up front avoids surprises when the invoice lands.

Sources

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