What is Currency Adjustment Factor?
A currency adjustment factor (CAF) is a surcharge applied by ocean carriers to offset exchange rate movements between the currency in which freight is quoted, usually US dollars, and the currencies in which the carrier incurs costs or collects revenue. It is normally expressed as a percentage of base ocean freight, sometimes as a fixed amount per container, and each carrier reviews it periodically for each trade. Historically, liner conferences set surcharges such as CAF jointly; since the EU repealed the liner conference block exemption of Regulation 4056/86 with effect from 18 October 2008, carriers in EU trades set them individually. In US trades, CAF must appear in the carrier's published tariff or be agreed in a service contract, since 46 U.S.C. 40501 requires tariffs to show all rates, charges, classifications, rules and practices. Like the bunker adjustment factor, it is a floating component that sits on top of the negotiated base rate.
Why it matters for forwarders
Because CAF floats, a rate that looks fixed can be invoiced differently if the carrier applies the surcharge level in force at shipment or sailing date rather than at quotation date. Forwarders should state in every quote whether surcharges are included, fixed for the validity period, or subject to change at time of shipment, and which date governs. In service contracts, all-in rates or a CAF frozen for the contract term remove that exposure for both the forwarder and its customer. CAF protects the carrier's currency position, not the forwarder's: buying in US dollars and invoicing customers in local currency creates a separate exchange risk the forwarder must manage itself. Check carrier invoices to make sure CAF is not charged twice through a separate exchange rate line.