Ocean Freight Surcharges

CAF Surcharge (Currency Adjustment Factor)

CAF (Currency Adjustment Factor): Adjustment for currency exchange rate fluctuations. When it applies, typical range, and who pays under common Incoterms.

Code
CAF
Name
Currency Adjustment Factor
Typical range
0-10% of freight rate
Routes
Any route where freight currency differs from cost currency

Currency Adjustment Factor (CAF) is a surcharge applied by shipping lines to protect against adverse currency exchange rate movements. When freight rates are quoted in one currency but operational costs are incurred in another, exchange rate volatility can significantly impact carrier profitability.

How CAF works: • Carriers establish a base exchange rate when setting freight tariffs • If the billing currency depreciates significantly against operational currencies, CAF increases • If the billing currency strengthens, CAF may decrease or be waived

CAF is most commonly applied when: • Freight is quoted in USD but costs are in EUR, JPY, or CNY • Significant currency volatility occurs • Long-term contracts need protection from FX movements

The surcharge is expressed as either: • A percentage of the base freight rate • A fixed amount per container • A combination of both

CAF has become less common on major trade lanes as most contracts are now dollar-denominated, but it remains significant for some regional trades and during periods of extreme currency volatility.

When CAF applies

When exchange rates move unfavorably against the carrier. Adjusted periodically.

Who pays CAF under common Incoterms

  • FOB: buyer
  • CIF: seller
  • EXW: buyer
  • DAP: seller

How to minimize CAF

  • Negotiate rates in your functional currency
  • Include CAF caps in service contracts
  • Use currency hedging for large shipments
  • Lock in all-inclusive rates when possible

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Frequently asked questions

What is the CAF surcharge?

CAF stands for Currency Adjustment Factor. Adjustment for currency exchange rate fluctuations.

When does CAF apply?

When exchange rates move unfavorably against the carrier. Adjusted periodically.

How much is CAF?

The typical range is 0-10% of freight rate. Confirm the current amount with your carrier or forwarder.