Surcharges and the freight invoice
BAF, GRI, demurrage: how to read the surcharges on your freight invoice
Surcharges dress up a freight invoice beyond the base freight: BAF covers fuel, CAF currency fluctuations, LSS compliance with low-sulphur fuel, GRI a general increase decided by the carriers, and the peak season surcharge strong seasonal demand. Demurrage and detention penalize a container immobilized for too long. A good freight forwarder itemizes each line and helps you anticipate them.
An international freight invoice is rarely read at a glance. On top of the base freight comes a series of surcharges with obscure acronyms, which can make up a significant share of the total. Understanding what they cover lets you check a quote, compare two freight forwarders on the same basis, and anticipate increases.
The most common surcharges
BAF (Bunker Adjustment Factor). The fuel surcharge. The price of bunker fuel fluctuates, so carriers isolate it from the base freight to pass it through, both up and down.
CAF (Currency Adjustment Factor). Covers currency fluctuations, since freight is often denominated in dollars while you pay in euros.
LSS (Low Sulphur Surcharge). Tied to the environmental standards on low-sulphur fuel imposed on vessels.
GRI (General Rate Increase). A general increase in rates decided by the carriers on a trade lane, announced in advance. It is the main lever for adjusting to the market.
Peak Season Surcharge (PSS). Applies during demand peaks, typically before Chinese New Year or the year-end high season.
THC (Terminal Handling Charges). Handling fees at the terminal, at origin and destination - often a source of nasty surprises when a quote shows only the freight.
Why my freight rate is going up
Ocean freight is an extremely volatile market of supply and demand. When vessels fill up - high season, reroutings via the Cape of Good Hope, port congestion, capacity withdrawal (blank sailings) - carriers raise prices through a GRI and pile on surcharges. Conversely, overcapacity sends rates plunging. From one week to the next, the price of the same container can vary sharply.
Demurrage and detention: the trap that costs dearly
Two fees often come along to inflate an invoice without the importer having anticipated them:
- Demurrage: the container sits too long at the terminal after the vessel arrives.
- Detention: you keep the container too long outside the port before returning it empty.
In both cases, you have a number of free time days. Beyond that, the meter runs, sometimes at several hundred euros a day. The defense is operational: clear customs before arrival, organize pickup and return without delay, and have your forwarder track the countdown.
What a good freight forwarder should do for you
A readable quote itemizes each line rather than showing an “all-in” price that catches up through add-on fees. Beyond the quote, the role of a forwarder like OVRSEA is to anticipate: warn you of an upcoming GRI, monitor your free time to avoid demurrage and detention, and explain each surcharge rather than letting you simply absorb it. Transparency on the invoice is the first sign of a reliable partner.
FAQ
What is the BAF surcharge on my freight invoice?
The BAF (Bunker Adjustment Factor) is a fuel surcharge. Because the price of bunker fuel varies, carriers isolate it from the base freight to pass it through, both up and down. It is expressed per container (TEU/FEU) and revised regularly, often monthly or quarterly.
What is a GRI in ocean freight, and why did my rate go up?
The GRI (General Rate Increase) is a general increase in rates decided by ocean carriers, usually announced in advance on a given trade lane. It reflects the state of supply and demand: when vessels fill up (peak season, reduced capacity, blank sailings), carriers apply a GRI to raise the market price.
What are demurrage and detention fees, and how do I avoid them?
Demurrage runs when the container sits too long at the port after arrival; detention when you keep the container too long outside the port. To avoid them: anticipate customs clearance before arrival, prepare the pickup and return of the container, and have your forwarder track the free time and alert you before it expires.
Why are ocean freight rates going up?
Rates rise when demand exceeds available capacity: seasonal peaks, reroutings (Red Sea, Panama), port congestion, withdrawal of vessels (blank sailings). Carriers then adjust through GRIs and surcharges. Conversely, overcapacity sends rates down. It is a highly volatile market that a freight forwarder tracks continuously for you.