Currency adjustment factor (Adjust for fluctuations in currency rates)
The currency adjustment factor (CAF) is a cost associated with trade between the United States and countries in the Pacific Rim. Due to a declining dollar value over time and currency fluctuations, while goods are in transit, shippers in that region impose a levy to cover the cost of currency fluctuations.
In addition to the base exchange rate, the CAF is a percentage applied to fees. An average exchange rate is calculated based on 3 months of exchange rates.
To offset the impact of the exchange rate on profits, carriers often attempt to enter into all-inclusive contracts that include all possible charges that can be incurred. Sea freight travelers between the U.S. and Pacific Rim countries commonly encounter these issues, but they can also be observed in other forms of shipments and in countries outside the U.S. and the Pacific Rim.
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