Do You Know These Surcharges in Sea Freight?

Surcharges in Sea Freight

Due to various factors involving vessels, cargo, ports and other conditions, carriers may incur extra expenses or economic losses during cargo transportation. To offset such costs and losses, carriers will charge additional fees on top of the base freight rate, known as Surcharges or Additional Charges. Surcharges cover a wide range of types. They may be cancelled or new surcharges may be introduced as market conditions change. This article sorts out common sea freight surcharges to help you gain a better understanding and avoid unexpected charges.

1. General Rate Increase (GRI)GRI stands for General Rate Increase. It is mostly applied on South America and US trade lanes. Rising shipping costs caused by ports, vessels, fuel, cargo or other factors prompt carriers to levy GRI to recover increased expenses.

2. Peak Season Surcharge (PSS)PSS stands for Peak Season Surcharge. Many carriers impose this charge during busy shipping seasons, similar to price hikes during China’s Spring Festival travel rush. The global shipping peak season is generally from April to November each year.

3. Emergency Bunker Surcharge (EBS)EBS stands for Emergency Bunker Surcharge. It is a type of sea freight surcharge, normally settled in US dollars. Under FOB terms, this cost is borne by the consignee instead of the shipper, since EBS is not a local charge at the loading port. It can be prepaid or collect. EBS is a temporary surcharge introduced when crude oil prices surge sharply. Carriers add this fee to compensate for spiking fuel costs when market demand is weak and standard ocean freight rates cannot be raised promptly.

4. Terminal Handling Charge (THC)THC stands for Terminal Handling Charge. It is divided into OTHC (Origin Terminal Handling Charge) and DTHC (Destination Terminal Handling Charge).

5. Origin Receiving Charge (ORC)ORC stands for Original Receiving Charge. It is a relatively complex fee with both connections and differences compared with THC. ORC is only applicable at ports in South China, mainly Guangdong. THC is available at all ports including those in Guangdong. Only one of ORC or THC will be charged: if ORC is applied, THC will not be collected, and vice versa. ORC applies exclusively to shipments departing from South China ports bound for long-haul destinations including North America, Central & South America, Europe and North Africa. Shipments from South China ports to other destinations such as Southeast Asia will only incur THC, same as other regions.

6. Port Congestion Surcharge (PCS)PCS stands for Port Congestion Surcharge. When ports are congested or extremely busy, vessel waiting time and sailing schedules will be extended, while tugboat and berthing costs rise sharply. Carriers charge PCS to shippers to cover the increased transportation costs.

7. Container Imbalance Charge (CIC)CIC stands for Container Imbalance Charge, also called Container Imbalance Surcharge. Triggered by unbalanced trade volume or seasonal fluctuations that create mismatches between cargo flow and container availability, this surcharge helps carriers offset the cost of repositioning empty containers.

   

8. Destination Delivery Charge (DDC)DDC stands for Destination Delivery Charge. Under DDU and DDP terms, this fee is the shipper’s responsibility. Otherwise, it is paid by the consignee. For example, under CIF terms, the buyer/consignee bears all costs and risks after goods pass the ship’s rail at the loading port, so all destination charges including DDC fall to the consignee.

9. Heavy-Lift Additional (HLA)HLA, also known as Surcharge For Over Weight. It applies when the weight of a single piece of cargo exceeds a specified threshold (standards vary by forwarder and carrier). Heavy cargo requires special equipment such as heavy cranes, extra dunnage, securing materials and labour for lashing, or special stowage arrangements on board. The surcharge compensates for extra handling costs. Common weight thresholds are 2 tons, 3 tons or 5 tons. The heavier the cargo, the higher the surcharge. If transshipment is needed, the surcharge will be charged for each transshipment.

10. Currency Adjustment Factor (CAF)CAF stands for Currency Adjustment Factor, also known as CAS (Currency Adjustment Surcharge). Carriers suffer losses when the settlement currency depreciates significantly. CAF transfers such exchange losses to shippers.

11. Long Length Additional (LLA)LLA, also called Over Length Additional or Surcharge For Over Length. It is charged when a single cargo item exceeds the length limit (standards differ by forwarder and carrier). Oversized cargo requires special equipment and handling, and special stowage planning on vessels. The surcharge covers additional operational expenses. Generally, cargo over 9 meters qualifies as over-length; for container cargo, the threshold is usually 6 meters. Rates rise progressively with length.

12. Emergency Cost Recovery Surcharge (ECRS)ECRS stands for Emergency Cost Recovery Surcharge, also referred to as bad weather operation surcharge. It is imposed when adverse weather causes substantial increases in vessel operation and transportation costs.

13. Container Service Charge (CSC)CSC stands for Container Service Charge.

14. Fuel Adjustment Factor (FAF)FAF stands for Fuel Adjustment Factor, mainly used on Japan routes. It is similar in nature to the temporary bunker surcharges mentioned above, just under a different name.

15. Entry Summary Declaration (ENS)ENS stands for Entry Summary Declaration, the advance manifest rule of European customs. Effective from 1 January 2011, the EU mandates advance manifest filing for all cargo imported into the EU, or transiting via EU ports, including transshipment cargo and onboard cargo not discharged. The rule applies to all EU member states.

16. Suez Canal Surcharge (SCS)SCS stands for Suez Canal Surcharge. Most routes from Asia, Oceania and East Africa to Europe pass through the Suez Canal. Carriers pay canal transit fees to the canal authority and recover this cost from customers via SCS.

17. Panama Canal Transit Fee (PTF)PTF stands for Panama Canal Transit Fee. Similar to SCS. Routes from the Far East and US West Coast to US East Coast go through the Panama Canal. Carriers pass the canal toll to customers through PTF.

18. Document Fee (DOC)DOC = Document. In freight forwarding, there are two types of DOC charges. One is collected by shipping lines as a fixed RMB fee. The other is destination DOC, one of the basic destination charges collected by overseas agents in USD with rates varying by agent.

19. Automated Manifest System (AMS)AMS stands for Automated Manifest System. Used for US and Canada routes, it is US-specific. All cargo shipped to the US or transshipped via the US must complete AMS filing 24 hours before loading. AMS is also known as the 24-hour manifest system or US anti-terror manifest system.

20. Temporary Additional Risks (TAR)TAR stands for Temporary Additional Risks. It can be simply understood as another name for war risk surcharge.

21. Advance Commercial Information (ACI)ACI stands for Advance Commercial Information. It is a Canadian customs requirement. All cargo arriving in Canada or transiting via Canada must be declared to Canadian customs 24 hours prior to loading, similar to US AMS.

22. General Rate Increase (GRI)GRI stands for General Rate Increase. It is mostly applied on South America and US trade lanes. Rising shipping costs caused by ports, vessels, fuel, cargo or other factors prompt carriers to levy GRI to recover increased expenses.

23. Cleaning Charge (CC)CC stands for Cleaning Charge, also called tank cleaning labour charge. It is commonly seen in breakbulk shipping.

24. Bunker Surcharge / Bunker Adjustment Factor (BAF)Bunker surcharge or BAF is added when fuel prices rise sharply.

25. Transshipment SurchargeTransshipment Surcharge applies to cargo bound for non-base ports that needs transshipment to the destination. It includes transshipment fees and second-leg ocean freight.

26. Direct AdditionalDirect Additional is charged when sufficient cargo volume to a non-base port allows the carrier to arrange a direct call instead of transshipment.

27. Port Additional / Port SurchargePort Additional or Port Surcharge is imposed by carriers at certain ports with poor facilities, low handling efficiency or other unfavourable conditions.

28. Optional SurchargeOptional Surcharge applies when the shipper cannot confirm the exact discharge port at booking and reserves the right to select one unloading port from two or more nominated ports.

29. Deviation SurchargeDeviation Surcharge is collected when vessels have to reroute to deliver cargo because the original waterway is blocked.

30. Alternation of Destination ChargeAlternation of Destination Charge is charged when the shipper requests to change the originally agreed discharge port, subject to customs approval and carrier consent.