CAF (Currency Adjustment Factor)

Currency Adjustment Factor (CAF) is one of the common surcharges in international ocean shipping, used to compensate for the risk of reduced carrier revenue due to exchange rate fluctuations. When freight is denominated in a certain currency (e.g., USD) while the carrier's actual operating costs involve another currency (e.g., local currency), if the denominated currency depreciates, the carrier's actual revenue shrinks, and CAF is added to compensate. CAF is usually calculated as a percentage of the base freight and is adjusted and published by shipping lines from time to time. It is commonly seen on ocean-going routes, especially when the local currency fluctuates sharply against the USD. Note: CAF is different from Bunker Adjustment Factor (BAF); the former addresses exchange rate risk, while the latter addresses fuel price fluctuations. CAF may also be stacked with Peak Season Surcharge (PSS), etc. Foreign trade practitioners should pay attention to shipping line notices, clarify whether CAF is included in quotations, and avoid profit erosion. In addition, CAF is not fixed and may be adjusted monthly or quarterly; contracts should stipulate the adjustment mechanism. Unlike GRI (General Rate Increase), CAF is a temporary, compensatory charge rather than a rate increase.