You agreed on a freight rate, but when the invoice arrives it is 40% higher than expected — full of acronyms you do not recognise. Understanding what each surcharge is for gives you the ability to challenge incorrect charges, benchmark your costs, and negotiate more effectively.
Why Surcharges Exist
Freight surcharges exist because the base ocean or air rate cannot fully capture the real and variable costs of international shipping. Rather than constantly repricing their tariffs, carriers use surcharges to recover specific cost increases — particularly fuel costs, currency fluctuations, and demand peaks.
Ocean Freight Surcharges Decoded
- BAF (Bunker Adjustment Factor) — Also called Fuel Adjustment Factor. Published monthly based on bunker oil prices. Can range from $100-800 per container on major trade lanes.
- CAF (Currency Adjustment Factor) — Compensates for exchange rate fluctuations. Typically 1-5% of the base rate.
- PSS (Peak Season Surcharge) — Applied during high-demand periods (August-November and February-March). Can add $200-1,500 per container.
- GRI (General Rate Increase) — A blanket rate increase for a trade lane. Usually published with 30 days notice.
- THC (Terminal Handling Charge) — Charged by the terminal operator at origin and destination ports. Fixed by the port and typically non-negotiable.
- CIC (Container Imbalance Charge) — Applied on trade lanes with significant imbalance in container flows, requiring carriers to reposition empty containers.
- PCS (Panama Canal Surcharge) — Reflects toll costs passed through by carriers for Panama Canal transits.
Air Freight Surcharges Decoded
- FSC (Fuel Surcharge) — The most significant air freight surcharge. Published monthly by major airlines. Typically expressed as a per-kg charge.
- SSC (Security Surcharge) — Per-kg charge covering mandatory enhanced security screening for air cargo.
- DGR surcharge (Dangerous Goods) — Applied to shipments containing IATA dangerous goods.
How to Challenge Incorrect Surcharges
Ask your forwarder for the justification of any surcharge you do not recognise. Carriers publish their surcharge schedules on their websites. Common areas where incorrect charges appear: double-billing of THC, surcharges applied at outdated higher rates, and invented or non-standard charges.
