Freight Rates and Surcharges Flashcards
6 cards from real Ocean Sea Freight practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Freight Rates and Surcharges flashcards as text
What is a 'Service Contract' in US ocean freight and who issues them?
Answer: A confidential agreement between a shipper and an ocean carrier fixing rates and service commitments for a defined period
Under the Shipping Act of 1984 (as amended by OSRA 98), ocean carriers and shippers can enter confidential Service Contracts that fix rates, minimum volume commitments, and service standards for a contract period.
What is a 'Spot Rate' in ocean freight?
Answer: A one-time market rate quoted for an immediate or near-term shipment, subject to current supply/demand conditions
Spot rates are market-driven rates quoted for individual shipments without long-term commitment — they can be lower or higher than contract rates depending on vessel capacity and demand.
What is a 'CAF' (Currency Adjustment Factor) in ocean freight surcharges?
Answer: A surcharge added to base rates to compensate for exchange rate fluctuations affecting carrier revenues
CAF is a surcharge applied when currency exchange rate movements adversely affect the carrier's revenue — it adjusts the effective freight rate to compensate for depreciation of the billing currency.
What does 'W/M' (Weight or Measure) mean in LCL freight rating?
Answer: The freight rate applies to whichever is greater — the actual weight (per ton) or the volume (per CBM) — giving the higher chargeable figure
W/M (Weight or Measure) means the freight charge is calculated on either 1 metric ton or 1 CBM — whichever yields a higher charge — ensuring the carrier is compensated fairly for both heavy and bulky cargo.
What is an 'EBS' (Emergency Bunker Surcharge) in ocean freight?
Answer: An additional fuel surcharge imposed when oil prices spike beyond normal BAF adjustment levels
EBS is imposed by carriers on top of BAF when sudden, significant increases in fuel costs cannot be absorbed by the existing BAF level — it is a short-term reactive surcharge.
What is a 'Minimum Bill of Lading Fee' (Minimum B/L) in ocean freight?
Answer: The minimum freight charge applied regardless of actual cargo weight or volume
The Minimum B/L establishes the floor charge for a shipment — even if the W/M calculation results in a very low freight figure, the shipper pays at least this minimum amount.