Average Freight Rate Assessment (AFRA)

(shipping) The average transportation cost per ton for a given month for vessels in different size categories as established by the London Tanker Brokers’ Panel. AFRA and its Terms of Reference were originally created by Shell Oil Company and then BP (British Petroleum) as a means of establishing internal rates for charging affiliates for the transport of crude oil and petroleum products. Shell and BP ceased their sponsorship of AFRA in 1982. Since that time the London Tanker Brokers’ Panel has compiled the AFRA based upon known transportation agreements concluded on the open market. AFRA is recognized by the tax authorities of many countries for pricing of intra-company oil movements.

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