Currency Adjustment Factor (CAF)
A Currency Adjustment Factor (CAF) is a surcharge imposed by a carrier on ocean freight charges to offset foreign currency fluctuations. The CAF is typically a percentage of the freight cost and varies according to the type of cargo, the route, and the forwarder’s agreement with the carrier.
The purpose of a CAF is to protect the carrier from losses incurred when converting currencies. For example, if the dollar weakens against the euro, the freight cost for goods moving from Europe to the United States will increase, even if the price of oil has remained stable. To account for this difference, carriers may add a CAF to their rates.
CAFs are also used as a way to pass along fuel surcharges, which can fluctuate rapidly. By adding a CAF to their rates, carriers can adjust their prices quickly, without having to re-negotiate their contracts with shippers.
While CAFs can be a significant cost for shippers, they are generally not negotiable. In some cases, forwarders may be able to negotiate a lower CAF on behalf of their clients, but this is not always possible.
CAFs are just one type of fee that can be added to ocean freight charges. Other fees include terminal handling charges (THC), documentation fees, and storage fees.
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