Definition of Ocean Freight Surcharge

Ocean freight surcharges are some extra fees charged by shipping companies or freight forwarders in addition to the ocean freight, which are used to make up for the increase or fluctuation of shipping costs, or to provide some special services. These charges usually appear in the form of English abbreviations in the quotation or invoice, if you do not understand its meaning and calculation method, it is easy to cause misunderstanding or dispute.

Types of Ocean Freight Surcharge

There are many types of ocean freight surcharges, and they are constantly adjusted with market changes. The following are some common ocean freight surcharges:

BAF(Bunker Adjustment Fee)(BAF/FAF/EBS/EBA/IFA):

BAF(Bunker Adjustment Factor): Fuel surcharge, available on most routes, but with different standards and designations.

FAF (Fuel Adjustment Factor): Fuel price adjustment surcharge, exclusively for Japan routes.

EBS (Emergency Bunker Surcharge)/EBA (Emergency Bunker Add): Emergency Bunker Surcharge, used temporarily during peak season on most ocean routes.

IFA (Interim Fuel Additional): Interim fuel surcharge, used temporarily on certain routes.

Currency Adjustment Surcharge (CAF/YAS):

CAF (Currency Adjustment Factor): Currency devaluation surcharge, available on most routes, but with different standards and designations.

YAS (Yen Adjustment Surcharge): Yen Adjustment Surcharge, exclusively for Japanese routes.

Terminal Handling Charge (THC/ORC):

THC (Terminal Handling Charge): Terminal Handling Charge, including Originating Terminal Handling Charge (OTHC) and Destination Terminal Handling Charge (DTHC).

ORC (Origin Receiving Charge): Origin Receiving Charge, also known as South China Terminal Charge, which is only charged on routes exporting to Europe and America or transiting in Europe and America in Guangdong, and is a variant of THC.

Peak Season Surcharge (PSS):

PSS (Peak Season Surcharge): Peak Season Surcharge, mostly used on European and American routes, is used temporarily during the peak freight season.

GRI (General Rate Increase):

GRI (General Rate Increase): General Rate Increase Surcharge is used to compensate for the freight rate increase due to the cost increase of the shipping company, and is mostly used on ocean routes.

Port Congestion Surcharge (PCS):

PCS (Port Congestion Surcharge): Port Congestion Surcharge, commonly known as Pier Congestion Charge, may be charged by any pier that is stuffed with harbours, such as the ports in North Africa, Israel and other countries all year round.

Destination Delivery Charge (DDC):

DDC (Destination Delivery Charges): Destination Delivery Charges, used in US and Canada routes.

Document Charge (DOC):

DOC (Document Charge): Documentation charge and bill of lading charge.

Canal Surcharge (PTF/SCS):

PTF (Panama Canal Transit Fee): Panama Canal Surcharge, used on all routes through the Panama Canal.

SCS (Suez Canal Surcharge): Suez Canal Surcharge, used on all routes through the Suez Canal.

ISPS (International Ship and Port Facility Security Surcharge):

ISPS (International Ship and Port Facility Security Code): A surcharge based on the ISPS Code.

AGS (Aden Gulf Emergency Risk Surcharge):

AGS (Aden Gulf Surcharge), ARS (Aden Gulf Risk Surcharge), ERS (Emergency Risk Surcharge): These are the Gulf of Aden Emergency Risk Surcharges, which are used to compensate shipping companies for increased freight rates due to the risk of piracy in the Gulf of Aden.

HLC/LLC/Heavy-Lift Additional/Long Length Additional (HLC/LLC/Heavy-Lift Additional/Long Length Additional):

Refers to the weight or length of a single piece of cargo exceeds a certain standard (different freight forwarders or shipowners may not be the same standard), requires special equipment or special operation, loading and unloading operations are more difficult, or in the ship accumulates loads need special treatment, in order to make up for the increase in the operating costs of a surcharge.

Container Service Charge (CSC):

A surcharge charged for the provision of services such as maintenance, servicing and cleaning of containers or cargo tanks.

CC/Cleaning Charge:

A surcharge for cleaning and disinfecting the hold before and after loading and unloading of cargo to ensure cargo quality and safety.

Inland Proximity Intermodal Interchange (IPI):

IPI (Interior Point Intermodal): an inland transhipment charge, common in the United States.

Other Surcharges:

Such as Shanghai Port Surcharge (SPS), Automatic Manifest System Entry Fee (AMS), Canada Security Surcharge (ACC), Select Port of Discharge Surcharge, Change Port of Discharge Surcharge, Ice Surcharge (Ice Surcharge), Fumigation Charge (Fumigation Charge) and so on.

The impact of shipping surcharges

Shipping surcharges on shipping costs, logistics efficiency and international trade have far-reaching impact.

Increase shipping costs: the collection of shipping surcharges directly increase the cost of shipping for export enterprises, which undoubtedly increased its operating pressure.

Impact on logistics efficiency: maritime surcharges are varied and constantly changing, bringing considerable challenges to the operation and management of logistics enterprises. If logistics enterprises cannot understand and adapt to these changes in time, it may lead to a decline in logistics efficiency.

Impact on international trade: the increase in maritime surcharges may make the transport costs of international trade rise, which in turn affects the competitiveness of international trade. Especially in the case of the global economic downturn, the increase in shipping surcharges may further aggravate the contraction of international trade.

How to deal with changes in maritime transport surcharges

In the face of continuous changes in maritime surcharges, logistics companies and export enterprises need to take positive measures to reduce its impact.

Strengthen market research: logistics companies and export enterprises need to pay close attention to market dynamics and changes in shipping costs, in order to adjust the transport strategy and pricing strategy.

Optimise transport solutions: Reduce transport costs by optimising transport routes, increasing loading rates and reducing idle rates. At the same time, it is also possible to consider the use of multimodal transport and other modes of transport to reduce the impact of maritime surcharges.

Strengthen risk management: logistics enterprises and export enterprises need to establish a perfect risk management mechanism, so that when faced with risks such as the rise in maritime surcharges can be timely response and reduce losses.

In short, as an important part of shipping costs, maritime surcharges have an important impact on logistics enterprises and export enterprises. Therefore, we need to pay close attention to its changes and take corresponding countermeasures to reduce its impact. At the same time, it is also necessary to strengthen the industry's self-regulation and supervision to promote the healthy development of the shipping market.