Understanding Ocean Freight Costs — What Are BAF, CAF, and THC?

Open an ocean freight quote and you'll often find a base rate plus a string of unfamiliar acronyms tacked on. Without understanding these surcharges, it's hard to tell why quotes differ between carriers, or why your final invoice runs higher than the number you negotiated. This guide covers the surcharge line items you'll actually see in practice.

Base ocean freight (O/F)

This is the basic charge for moving cargo from the port of loading to the port of discharge. It fluctuates by carrier, route, and season, typically priced per container unit (TEU/FEU) or by Revenue Ton (R/T).

Common surcharge line items

• BAF (Bunker Adjustment Factor): reflects fluctuations in bunker fuel prices — rises when fuel costs rise. Some trade lanes call the same concept FAF or EBS.
• CAF (Currency Adjustment Factor): since freight is typically priced in USD, this surcharge protects the carrier's margin against exchange rate swings.
• THC (Terminal Handling Charge): the cost of loading and unloading containers at the port terminal — charged separately at origin (O-THC) and destination (D-THC).
• CFS Charge: the cost of consolidating (stuffing) or deconsolidating (destuffing) LCL cargo at a Container Freight Station.
• LSS (Low Sulphur Surcharge): reflects the added cost of low-sulfur fuel required under IMO's sulfur emissions regulation (IMO 2020).
• PSS (Peak Season Surcharge): applied during periods of surging demand (e.g., ahead of US retail peak season).
• Documentation Fee / Seal Fee: pass-through costs for document issuance and container seals.

Why you can't quote-shop on base rate alone

Carriers and forwarders on the same route often quote a low base rate while billing surcharges separately, so comparing base rates alone understates the true total cost. Always request and compare quotes on an all-in rate basis (every line item included) for an accurate cost comparison.

Practical checklist

• Ask for base rate and surcharges broken out separately, but ultimately compare on an all-in basis.
• Since CAF tracks currency movement directly, check the exchange rate at the time of contracting — it makes later billing swings easier to understand.
• BAF and PSS track global fuel prices and shipping volume, so checking shipping indices and oil price trends regularly on our Logistics Briefing helps anticipate when rates are about to shift.
• Since surcharge line items and amounts vary by carrier and forwarder, comparing multiple quotes on an all-in basis is the most reliable way to control cost.