How to understand the abbreviations used in the shipping industry? There are many factors that determine the rates of shipping containers. Not to mention whether a booking includes extra services such as pre/post transport, handling charges etc. Because so many different abbreviations are used to outline these costs, and they are often presented differently by different shipping companies with ultimately the same meaning, it is difficult to keep an overview as a shipper or forwarder. There are several abbreviations used by shipping companies to charge shippers. Below is a description of the most common abbreviations:
1. THC (Terminal Handling Charge)
This is a surcharge charged for handling containers at the terminals. It includes the costs of loading and unloading the containers, the use of terminal facilities and the administrative costs associated with container handling.
2. BAF (Bunker Adjustment Factor)
This is a surcharge that is calculated based on the fluctuations in fuel prices. It is intended to cover the cost of the fuel used to propel the ship.
3. CAF (Currency Adjustment Factor)
This is a surcharge calculated to compensate for exchange rate fluctuations. It is used to cover the costs of transportation that arise due to fluctuations in exchange rates.
4. EBS (Emergency Bunker Surcharge)
This is a surcharge charged in the event of an unexpected increase in fuel prices. It is used to cover the cost of fuel that was not included in the original BAF.
5. PSS (Peak Season Surcharge)
This is a surcharge charged during the peak season when there is more demand for shipping capacity than available. It is used to cover the cost of additional capacity needed to meet demand.
6. ISPS (International Ship and Port Facility Security)
This is a surcharge charged to meet the security requirements set out in the ISPS code. It includes the cost of additional security measures taken to ensure the safety of the cargo and vessel.
7. LSS (Low Sulfur Surcharge)
This is a surcharge charged as a result of international environmental regulations to reduce the sulfur content of marine fuel. It is used to cover the additional costs associated with using fuel with a lower sulfur content.
8. DDC (Destination Delivery Charge)
This is a surcharge charged for the delivery of the cargo to the final destination. It includes the cost of transporting the cargo from the terminal to the final destination, including administrative costs.
9. OTHC (Origin Terminal Handling Charge)
This is a surcharge charged for handling containers at the departure terminal. It includes the costs of loading containers onto the ship, use of the terminal facilities and administrative costs.
10. DOC (Documentation Fee)
This is a surcharge charged for the administrative processing of shipping documentation. It includes the costs of preparing the documentation, shipping and delivering the documents to the shipper.
11. GRI (General Rate Increase)
This is a surcharge charged as a result of a general increase in freight costs. It is used to cover the extra costs associated with carrying out the transport.
It is good to remember that depending on the shipping company and the trade route, further abbreviations and surcharges can be used. Unfortunately, there is no clarity between the shipping companies with the surcharges that are charged. So keep in mind that this does not use one way to pass on costs to shippers. If you have any questions, feel free to contact us.