In addition to regular freight costs, a quote or invoice for sea freight shipments usually includes several surcharges. Here you can find the most common sea freight surcharges and their meanings.
The Bunker Adjustment Factor (BAF) applies to sea freight costs and is calculated based on the fuel costs incurred when transporting goods by sea. This surcharge is intended to cover fluctuations in fuel costs for container ships. BAF can be calculated as a fixed amount per TEU (Twenty-foot Equivalent Unit).
The Currency Adjustment Factor (CAF) is a surcharge added to sea freight costs. CAF is intended to protect shipping companies against the financial risks associated with fluctuations in currency exchange rates. In most common cases, this surcharge is calculated as a percentage of the freight.
The General Rate Increase (GRI) is a surcharge on sea freight costs that is applied to cover general cost increases in the shipping industry. The GRI surcharge is almost always expressed as a fixed amount per container. This surcharge is announced and applied periodically by shipping companies and can vary depending on shipping routes and trade areas.
The Low Sulphur Fee (LSF) is a surcharge on sea freight costs that has arisen because of stricter environmental standards for sulfur oxide emissions in the shipping industry. These environmental standards require container ships to use low-sulfur fuel to improve air quality. The additional costs of this fuel are passed on to customers by shipping companies through this surcharge. The calculation may vary, but it typically involves a fixed amount per TEU (Twenty-foot Equivalent Unit).
The Piracy Risk Surcharge (PRS) is a surcharge on sea freight costs that is applied on routes where there is an increased risk of piracy, particularly in some parts of the world such as the Gulf of Aden and the Indian Ocean. Shipping companies implement additional security measures to ensure the safety of the crew and cargo. The costs of these security measures are passed on to customers as a Piracy Risk Surcharge. The calculation may vary and can be a fixed amount per TEU (Twenty-foot Equivalent Unit).
The Peak Season Surcharge (PSS) is a surcharge on sea freight costs that is applied during periods of high demand and congestion in the sea freight sector. This surcharge is intended to assist shipping companies in coping with additional operational costs and to regulate the availability of space and services when demand exceeds supply. The calculation of the PSS may vary and is typically expressed as a fixed amount per TEU (Twenty-foot Equivalent Unit).
The War Risk Surcharge (WRS) is applied to sea freight costs during periods of heightened risk of war or political instability in specific regions or shipping routes. This surcharge is activated when there are specific threats or conflicts that jeopardize the safety of maritime transportation. The costs of additional security measures, such as deploying armed security personnel, are passed on to customers through this surcharge. The calculation of the War Risk Surcharge may vary and is typically expressed as a fixed amount per TEU (Twenty-foot Equivalent Unit).
The CBAM (Carbon Border Adjustment Mechanism) is an initiative of the European Union, involving an import tax applied to specific goods imported into the EU. Its aim is to ensure that imported goods also align with the EU's climate objectives. This is achieved by levying charges based on CO2 emissions. It requires importers of certain goods to purchase what are known as CBAM certificates to offset the emissions generated during the production of those goods.
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