Ancillary charges are typically broken out from base rates in order to specifically address cost impacts to carrier operations, as opposed to the value of particular transportation and logistics services provided in a particular commodity or country market. Carriers achieve greater predictability in their revenue streams and shippers gain better transparency and understanding of their costs.
Surcharges are ‘floating’ charges, adjusted on a regular basis to reflect costs that are in constant flux, such as exchange rates or world marine fuel prices. They include the following terms:
Bunker Adjustment Factor Compensates for wide fluctuations in marine bunker fuel and diesel oil (BAF/BUC/FAF/GFS).
Changes in fuel prices result in fluctuating costs for the transport industry, necessitating a variable fuel surcharge which may rise, fall or be removed, in line with movements in fuel prices
Addresses costs related to schedule delays, rerouting of cargo and other impacts from sudden or sustained port congestion.
Addresses higher insurance premiums, shipment rerouting or rescheduling, and other increased costs serving countries at risk of war or armed conflict.
A small customary payment over and above the freight and BAF/BUC made to the master of the ship for his care and trouble. It is now generally included in the freight, as an additional percentage. It varies according to the usages of different ports and particular trades.
Currency Adjustment Factor is a freight surcharge or adjustment factor imposed by carrier’s to offset foreign currency fluctuations. In some cases an emergency currency adjustment factor may be applied when a charge or rate has been originally published in a currency that is experiencing sustained or rapid decline.
General Rate Increase which is applied by the individual shipping lines. The rate is subject to fluctuation. (also known as ERR)
International Ship and Port Facility Security Code is an amendment to the Safety of Life at Sea (SOLAS) Convention (1974/1988) on minimum security arrangements for ships, ports and government agencies.
Peak Season Surcharge compensates for the large volumes of traffic being exported to and from a country or continent during peak times. This fee is set by the individual shipping line and will remain in effect for the entirety of the peak season.
Piracy Risk contributes to the additional costs for security in the Gulf of Aden. The additional costs include crew risk compensation, cancellation of economical speed and redeployment of vessel.
The Suez Canal is used by all the major shipping lines to connect Europe and Asia. This surcharge is charged by the shipping lines for cargo transporting through the Canal.
A Heavy Weight Surcharge may be applicable on shipments due to the volume of heavy loaded containers exceeding the allocated space on vessels. This charge is implemented by carriers to try and maximise space on vessels before the weight capacity is exceeded.
The Emission Control Area (Also known as Low Sulphur) Surcharge is a charge applicable in sea areas where stricter controls were established to minimise the airborne emissions from ships.
Verification of the gross mass of a packed container. This regulation requires all containers to have a recorded weight which matches the actual weight of the container when loaded on the vessel. It is the responsibility of the manufacturer/shipper to confirm the VGM prior to shipment at origin.
Emergency Bunker/Fuel Surcharge is a fee set by the individual shipping line to compensate for any major changes in bunker fuel costs.