Decoding Ocean Freight Surcharges
Ocean freight quotes often separate base rates from surcharges, making true cost comparison difficult. Understanding each charge helps you evaluate quotes and forecast costs accurately.
Fuel-Related Surcharges
BAF (Bunker Adjustment Factor)
- Compensates for fuel price fluctuations
- Major component of ocean rate (20-40% of total)
- Recalculated monthly or quarterly
- Varies by trade lane and vessel efficiency
- Also called: FAF, EBS, BUC
LSS (Low Sulfur Surcharge)
- Covers IMO 2020 compliant fuel costs
- Required for vessels using low-sulfur fuel
- Sometimes merged into BAF
Currency Surcharges
CAF (Currency Adjustment Factor)
- Hedges against USD exchange rate volatility
- Percentage of base rate (typically 0-10%)
- Adjusted quarterly by carriers
- Varies by trade lane
Terminal Handling Charges
THC (Terminal Handling Charge)
- Charged at origin AND destination
- Covers loading/unloading at port terminals
- Fixed per container regardless of route
- Significant cost (often $200-$500 per container)
CFS (Container Freight Station)
- Handling fee for LCL cargo
- Covers consolidation/deconsolidation
- Charged per CBM or per shipment
Security Surcharges
ISPS (International Ship and Port Security)
- Covers ISPS Code compliance
- Small fixed fee per container
- Applies at secure ports globally
AMS/ENS/ACI Fees
- Cargo manifest filing fees
- AMS: US (Automated Manifest System)
- ENS: EU (Entry Summary Declaration)
- ACI: Canada (Advance Commercial Information)
- Typically $25-$50 per bill of lading
Peak Season Surcharges
PSS (Peak Season Surcharge)
- Applied during high-demand periods
- Pre-Chinese New Year, pre-Christmas
- Can be $300-$1,500+ per container
- Announced with advance notice
GRI (General Rate Increase)
- Periodic base rate increases
- Announced monthly or quarterly
- Reflects capacity/demand balance
Route-Specific Surcharges
- Panama Canal Surcharge: Drought-driven capacity fees
- Suez Canal Surcharge: Transit fees and disruption costs
- War Risk Surcharge: High-risk zone premium (Red Sea, etc.)
- Arctic Sea Ice: Seasonal routing premiums
Destination Charges
DOC (Documentation Fee)
- Bill of lading issuance
- Fixed per shipment
DO (Delivery Order) Fee
- Release of cargo at destination
- Paid by consignee
Demurrage and Detention
- Demurrage: Container in port beyond free days
- Detention: Container off-port beyond free days
- Can reach $200-$400/day per container
All-In Rate Comparison
When comparing quotes, always calculate the all-in rate:
- Add base ocean rate
- Add BAF, CAF, LSS
- Add origin and destination THC
- Add documentation and security fees
- Include peak season surcharges if applicable
Low base rate quotes often disguise higher total costs through unbundled surcharges. Request "all-in" quotes for apples-to-apples comparison.
Negotiating with Carriers
- High-volume shippers can negotiate caps on BAF
- Annual contracts lock in THC and base rates
- Some surcharges non-negotiable (government fees)
- FAK (freight all kinds) rates can simplify billing
