Shippers may be overpaying for fuel costs as carriers introduced emergency bunker surcharges following the Iran conflict, creating the risk of duplicate recovery, according to Drewry. The maritime analyst warns that while standard Bunker Adjustment Factor (BAF) mechanisms have now caught up with higher fuel prices, many carriers have not yet withdrawn the emergency surcharges.
Background: The Iran Conflict Fuel Spike
The price of benchmark diesel fuel surged from $506 per metric ton on February 27, 2026 – the day before the U.S. attacked Iran – to $961.5 per ton on March 19, an increase of approximately 90% in less than three weeks, according to data from Ship & Bunker cited by Drewry. In response, ocean carriers introduced Emergency Bunker Adjustment Factor surcharges (eBAFs) to recover rapidly rising fuel costs.
“Fuel-related charges more than doubled following the escalation of the Iran conflict, as carriers introduced emergency bunker surcharges while standard BAF mechanisms gradually adjusted to higher bunker prices,” Drewry said. “This created a challenging environment for shippers, who faced not only rising transportation costs but also the risk of paying twice for fuel price increase.”
Fuel Surcharge Data: BAF vs. eBAF
Standard BAF on east-west headhaul trades had been relatively stable before the conflict, averaging $449 per 40-ft dry container in Q3 2025, $470 in Q4 2025, and $419 in Q1 2026. The impact of the war became evident in Q2 2026, when standard BAF initially fell to $406 as formulas had not yet reflected the surge, but the introduction of eBAF pushed total fuel-related charges to $798 – nearly double the underlying BAF level.
By Q3 2026, as fuel price increases were incorporated, standard BAF rose to $696, while total charges including eBAF soared to $1,088, according to Drewry.
| Quarter | Standard BAF (per 40-ft dry container) | eBAF | Total Fuel Charges (BAF + eBAF) |
|---|---|---|---|
| Q3 2025 | $449 | None | $449 |
| Q4 2025 | $470 | None | $470 |
| Q1 2026 | $419 | None | $419 |
| Q2 2026 | $406 | $392 | $798 |
| Q3 2026 | $696 | $392 | $1,088 |
Source: Drewry via Ship & Bunker
Duplicate Recovery Concerns
Drewry explained that standard BAF mechanisms are designed to capture increases in bunker and oil prices, albeit with a time lag. However, the introduction of eBAFs creates the potential for duplicate fuel cost recovery, where carriers recover higher fuel costs immediately through emergency surcharges and subsequently through increased standard BAF levels as bunker price movements are incorporated into quarterly calculations.
One positive development: Hapag-Lloyd agreed to withdraw emergency fuel surcharges once the higher BAF takes effect in July, avoiding duplicate recovery of fuel costs, Drewry reported. This move may set a precedent for other carriers.
Weakening Justification for eBAFs
The justification for maintaining eBAFs appears to be weakening as the temporary ceasefire agreement has eased concerns over further disruption to oil and bunker fuel markets, according to Drewry. The benchmark average bunker price has retreated significantly from its March peak, falling from $961.50 per ton on March 19 to $764.50 on June 18, as reported by Ship & Bunker.
Drewry stated, “As a result, shippers are likely to be in a stronger position to negotiate the removal of eBAFs and a return to normal indexed quarterly BAF mechanisms. With the underlying BAF already capturing fuel price movements through established adjustment formulas, maintaining emergency surcharges in the current environment would be increasingly difficult to justify.”
Implications for Shippers and Operators
Shippers should closely monitor surcharge structures and ensure that emergency measures do not remain in place after the underlying BAF has adjusted to market conditions, Drewry advised. Given the retreat in bunker prices and the upcoming BAF adjustment in July, shippers have leverage to push for eBAF removal. Carriers that fail to withdraw eBAFs may face scrutiny from cargo owners seeking fair cost recovery.
For logistics managers and freight forwarders, reviewing fuel surcharge clauses in contracts and engaging with carriers on this issue is critical to avoid overpaying. The situation highlights the importance of understanding how emergency surcharges interact with standard mechanisms, especially during geopolitical disruptions.
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