Currency Adjustment Factor (CAF)
In times of unstable currency, the freight rate is often quoted with a currency adjustment factor (CAF) to cover an additional charge for currency appreciation. The CAF, if any, is indicated on the bill of lading. The tariff of most international carriers uses the U.S. dollar as the basis of the freight cost calculation. The CAF allows for fluctuations in the value of the dollar against the currency in which the carrier earns its revenues.
Bunker Adjustment Factor (BAF)
The term bunker refers to oil. It may also refer to a compartment on a ship for storing fuel, that is, oil in modern ships and coal in old-time steamships.
In times of unstable oil prices, the freight is often quoted with a bunker adjustment factor (BAF) to cover an oil price hike. The BAF, if any, is indicated on the bill of lading. The BAF allows for fluctuations in the cost of oil.
|
