Currency Adjustment Factor

When we talk about assessorial charges, many different types of charges will come up. The usual ones like terminal handling and congestion surcharges are basically self explanatory. The Currency Adjustment Factor, however, can raise a lot of questions. So what is a Currency Adjustment Factor and why is it charged for shipments to some areas and not others? The Currency Adjustment Factor or “CAF”, as it is commonly called in the shipping industry, is an assessorial percentage charge that many companies find on their freight bills. This charge originally began between the United States and Pacific Rim countries but now there are other areas that will have a CAF outside this trade lane, especially in the current economy. Ocean freight carriers originally started charging the CAF since the currency exchange rates between the United States and the Pacific Rim countries were becoming too volatile for the steamship lines and freight carriers to keep up with. They were losing excessive money on the exchange rates so they came up with an additional percentage that would even out the losses. This CAF percentage has now become more important to steamship lines because of the many ups and downs in currencies around the world. It is because of this type of additional fees that people are now looking for all inclusive freight rates so they can avoid high assessorial charges. Otherwise, the CAF percentage is charged on top of other fees such as special equipment and peak season surcharges as well as the base ocean freight cost so this extra percentage can be a huge increase in freight costs.