CAF (Currency Adjustment Factor)

Currency Adjustment Factor (CAF) is a surcharge imposed by carriers on shippers in international ocean and air transport due to exchange rate fluctuations in the settlement currency, typically calculated as a percentage of the base freight. It is commonly applied when freight is denominated in a foreign currency such as USD, while the carrier's actual revenue must be converted into local currency; if the local currency depreciates or exchange rates fluctuate sharply, the carrier passes on the foreign exchange loss through CAF. Notes: CAF is not a fixed charge and may change with the frequency of exchange rate adjustments (e.g., monthly or quarterly). Shippers should confirm at the time of booking whether CAF is already included to avoid omissions in quotations; also, CAF must be distinguished from the Bunker Adjustment Factor (BAF), which arises from oil price fluctuations, whereas CAF is specifically due to exchange rate fluctuations. In addition, CAF is common in container transport but may be eliminated or consolidated on certain routes or under certain contracts (such as all-in rates). It is synonymous with "currency adjustment factor" but different from "exchange rate risk" itself; the latter is a commercial risk, while CAF is a specific form of freight surcharge.