Decoding Ocean Freight Surcharges: THC, CIC, BAF, LSS and the Rest

Ask three forwarders for a rate and the cheapest ocean freight number is rarely the cheapest shipment. The base rate is only one line of many; a column of surcharges and local charges at both ends does the rest. Knowing what each acronym means is how you compare quotes honestly instead of being surprised at the invoice.

Why the base rate is never the whole price

Carriers separate the ocean freight from a series of cost-recovery and local-handling charges so that fuel swings, currency moves and port fees can be passed through transparently. The effect, though, is that two quotes with very different base rates can land at the same total — or the "cheap" one can end up dearer once the extras are added.

Origin-side charges

• THC (Terminal Handling Charge): the port's fee for moving your container through the origin terminal.
• ISPS / security: port security surcharge under the international ship and port security code.
• B/L or documentation fee: issuing the bill of lading.
• Seal and telex/express release fees where applicable.
• CIC (Container Imbalance Charge): recovers the cost of repositioning empty containers to where they are needed.

The ocean line items

On the voyage itself you may see:

• BAF / FAF (Bunker / Fuel Adjustment Factor): a fuel surcharge that moves with oil prices.
• LSS (Low-Sulphur Surcharge): the extra cost of compliant low-sulphur fuel under IMO rules.
• CAF (Currency Adjustment Factor): protects the carrier against exchange-rate swings.
• PSS / GRI (Peak Season Surcharge / General Rate Increase): demand-driven rate moves during peaks.
• War-risk or emergency surcharges on affected routes.

A quote without its surcharges is not a price — it is a starting point. Always ask for the all-in, door-comparable number.

Destination charges

The far end mirrors the origin: destination THC, a Delivery Order (D/O) fee to release the cargo, sometimes a destination CIC, container cleaning, and any storage or demurrage if pickup is slow. On LCL these destination charges are billed per shipment and can rival the freight itself — the classic LCL surprise.

How to compare quotes

Never compare base rates. Ask every forwarder for an all-in figure covering origin local charges, ocean freight with surcharges, and destination charges to the same delivery point, in the same currency. Put the line items side by side. The quote that wins on the headline number frequently loses on the total — and the total is what you actually pay.