Freight Surcharge Decoder — Currency Adjustment Factor (CAF)

Ocean freight is priced in USD globally, but carriers incur costs in multiple currencies — local port fees, fuel purchased in Singapore or Rotterdam, bunker paid in various currencies, and ground operations in dozens of countries. When exchange rates shift, these costs can fluctuate significantly. The Currency Adjustment Factor (CAF) is the mechanism carriers use to pass currency risk to shippers.

How CAF Works

CAF is typically expressed as a percentage surcharge on top of the base ocean freight rate. The percentage is calculated based on the divergence between the base exchange rate (agreed at contract) and the current rate.

CAF % = (Current Rate − Base Rate) / Base Rate × Adjustment Factor

Common CAF rates range from +2% to +15%, depending on currency pair volatility. For example, if the USD/CNY rate moves from 6.50 to 7.20 (a ~10% yuan depreciation), carriers might apply a 5–8% CAF to recoup the additional cost of yuan-denominated operations.

CAF by Trade Lane (Typical Ranges)

Trade Lane	Primary Currency Exposure	Typical CAF Range
Asia → North Europe	CNY, JPY, KRW	+3% to +8%
Asia → North America	CNY, CAD	+2% to +6%
Asia → South America	CNY, BRL	+5% to +15%
Asia → Africa	CNY, ZAR	+4% to +12%

CAF vs. BAF: The Overlap

Both CAF and BAF are fuel/cost recovery mechanisms, and they often appear on the same freight quote. The key distinction:

• BAF — recovers rising fuel costs (bunker price)
• CAF — recovers currency exchange losses on operational costs

Some carriers have merged these into a single BAF/CAF or BAC surcharge, simplifying billing but reducing transparency.

Is CAF Justified?

This is a legitimate question. Critics argue that:

• Carriers often over-recover — applying CAF percentages that exceed actual currency exposure
• Forward contracts and currency hedging tools mean carriers can manage FX risk themselves
• CAF is rarely reduced when currencies move in the shipper's favor

Supporters (primarily carriers) argue that:

• Currency volatility on Asia routes is genuine and unmanaged in operational costs
• CAF provides predictability for both parties — carriers don't need to renegotiate contracts when rates move

How to Manage CAF

• Negotiate CAF caps in long-term contracts — agree on a maximum CAF percentage
• Request quarterly CAF reviews — some forwarders can build in auto-adjustment clauses
• Compare all-in vs. CAF-separated quotes — sometimes bundling hides CAF volatility
• Track currency indices — know when CAF should logically decrease (it rarely does without pressure)

Use our CAF surcharge decoder to understand the typical rate range for your trade lane.