The currency adjustment factor (CAF) is a fee placed on top of freighting charges for carrier companies. The charge was developed to account for constantly changing exchange rates between the dollar and other currencies. Thus its goal is to offset any losses from constantly fluctuating exchange rates for carriers. Calculation basis & methodology might vary from carrier to carrier.
The CAF increases as the US dollar decreases. It is applied as a percentage on top of the base exchange rate, which is calculated as the average exchange rate for the previous three months. Due to this added charge, shippers tend to enter into “all inclusive” contracts at one price, that accounts for all applicable charges, to limit the effect of the CAF.
In 2005, the CAF charged on shipments to Japan was 51%.
- ^ Jump up to:ab “Currency Adjustment Factor – CAF”. Academic Dictionaries and Encyclopedias.
- ^“Currency Adjustment Factor”. Global Forwarding.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.