Ocean Freight Surcharges: A Forwarder's Guide

When Maersk, Hapag-Lloyd, and CMA CGM rolled out war risk surcharges of up to $4,000 per container in early March 2026 following the Strait of Hormuz closure, many freight forwarders had less than 48 hours to recalculate open quotes, notify clients, and update invoices across their entire book of business. Some handled it cleanly. Others absorbed thousands in unrecovered costs because their surcharge management processes couldn’t keep pace.

Ocean freight surcharges are not a new concept — but the speed, frequency, and variety of surcharges in today’s market make them one of the most operationally demanding aspects of freight forwarding. This guide breaks down every surcharge category, explains the mechanics behind each one, and covers the operational practices that separate forwarders who manage surcharges profitably from those who bleed margin on every shipment.

The Role of Surcharges in Ocean Freight Pricing

Ocean freight pricing has two layers: the base freight rate (the negotiated rate per container or per CBM/ton for LCL) and the surcharges layered on top. Carriers use surcharges to pass through variable costs that change faster than contract rates can be renegotiated — fuel prices, currency shifts, port congestion, seasonal demand, and geopolitical risk.

For freight forwarders, surcharges create a unique operational challenge. You’re quoting clients at one point in time, but surcharges shift between the quote date and the actual sailing. Your buy rate from the carrier includes surcharges that may not match what you quoted. And your client expects the price you promised — or at least a clear explanation of why it changed.

In practice, surcharges can represent 30–60% of the total freight cost on many trade lanes. On routes affected by diversions or geopolitical events, surcharges can temporarily exceed the base rate itself. Ignoring them or treating them as a rounding error is how forwarders lose money on shipments that looked profitable at the quoting stage.

Fuel is the largest variable cost in shipping, and carriers have developed multiple mechanisms to pass it through.

BAF — Bunker Adjustment Factor

The most common fuel surcharge. BAF compensates carriers for fluctuations in bunker fuel prices and is typically recalculated quarterly (January 1, April 1, July 1, October 1), though some carriers adjust monthly. BAF varies by trade lane because fuel consumption differs by route distance and vessel deployment.

How it works in practice: Carriers publish BAF schedules tied to a fuel price index (usually Rotterdam or Singapore bunker prices). When you receive a carrier rate sheet, the BAF is listed separately from the base rate. On a Shanghai–Rotterdam move, BAF might be $300–$600/FEU depending on the quarter. On shorter routes, it’s proportionally less.

LSS — Low Sulphur Surcharge

Since IMO 2020 mandated a 0.5% sulphur cap on marine fuel (down from 3.5%), carriers have charged LSS to cover the price premium of compliant fuel. Some carriers fold LSS into BAF; others list it separately. If you see both on an invoice, verify there’s no double-counting — it’s a common billing dispute.

EBS — Emergency Bunker Surcharge

EBS kicks in when fuel prices spike rapidly between regular BAF adjustment periods. It’s essentially an off-cycle fuel surcharge. You’ll see EBS appear during oil price shocks or supply disruptions. In March 2026, CMA CGM, Hapag-Lloyd, and Maersk all introduced $300–$400/FEU emergency fuel fees linked to the Middle East disruptions affecting fuel supply routes.

EFF — Emergency Fuel Fee

Functionally identical to EBS — different carriers use different names. MSC tends to use EFF where Hapag-Lloyd uses EBS. When reconciling invoices across multiple carriers, map these to the same cost category.

Operational tip: Track fuel surcharges as a separate line item in your quoting and invoicing systems, never bundled into the base rate. When BAF adjusts quarterly, you need to update open quotes quickly. Forwarders using purpose-built freight ERPs that link surcharge tables to active quotes can propagate updates in minutes rather than manually reviewing every open file.

Currency and Financial Surcharges: CAF

CAF — Currency Adjustment Factor

CAF protects carriers against exchange rate movements. It’s charged as a percentage of the base freight rate — typically 2–8%, though it can spike higher during currency crises. CAF applies when the freight is denominated in one currency but the carrier’s costs are in another.

When it matters most for forwarders: If you’re quoting in BRL or MXN but buying freight in USD, you’re carrying currency risk on top of whatever CAF the carrier charges. Multi-currency operations need triple-layer visibility: the rate at process date, at invoice date, and at settlement date. The spread between these three can eat your margin on long-transit shipments if you’re not tracking it.

Terminal and Port Charges: THC, OTHC, DTHC, and Wharfage

THC — Terminal Handling Charge

THC covers the cost of moving containers within the port terminal — from the yard to the vessel (at origin) and from the vessel to the yard (at destination). It’s charged at both ends of the journey:

OTHC (Origin THC): Charged at the port of loading. Typically $100–$250/TEU depending on the port.
DTHC (Destination THC): Charged at the port of discharge. Often higher than OTHC at major hub ports.

THC is technically a port charge, not a carrier surcharge, but it appears on carrier invoices because the carrier collects it on behalf of the terminal. This creates a common dispute: the THC your carrier charges may include a markup over the terminal’s actual rate.

Wharfage

A port authority fee for using port infrastructure. Usually small ($5–$20/TEU) but it adds up on high-volume lanes. Some ports bundle it into THC; others list it separately.

Who pays what: Under FOB terms, the buyer (importer) typically bears destination THC while the seller covers origin THC. Under CIF, the seller covers origin charges and freight, but destination THC falls on the buyer. Under DDP, the seller bears everything. This is determined by the Incoterms — but forwarders must ensure their quotes explicitly state which terminal charges are included and which are extra.

Congestion and Operational Surcharges

PCS — Port Congestion Surcharge

Carriers impose PCS when vessel turnaround times increase due to port congestion. It compensates for the cost of vessels sitting idle at anchor. PCS is port-specific — it applies to congested ports, not the entire route. During the post-pandemic congestion crisis of 2021–2022, PCS at Los Angeles/Long Beach reached $1,000/FEU. In 2026, PCS remains common at high-traffic ports across Southeast Asia and the Indian subcontinent.

WRS — War Risk Surcharge

WRS covers the additional insurance premiums carriers pay when transiting conflict zones. This surcharge has become critically relevant in 2026:

The Red Sea/Suez Canal diversions (ongoing since late 2023) carry WRS for Yemen-area risk
The Strait of Hormuz closure in March 2026 triggered WRS of $1,500–$4,000/container for Gulf-linked cargo
P&I insurance was cancelled for Gulf transits from March 5, 2026, meaning vessels attempting the strait operate without standard coverage

WRS is one of the hardest surcharges to manage because it appears suddenly, at high dollar amounts, with minimal notice. Forwarders need contractual language that allows surcharge pass-through for force majeure events — without it, you’re absorbing four-figure surcharges on every container.

Piracy Surcharge

Similar to WRS but specifically for piracy risk zones (Gulf of Aden, West Africa, Strait of Malacca). Usually smaller than WRS — $50–$200/container.

How Do Seasonal and Rate Adjustment Surcharges Work?

GRI — General Rate Increase

GRI is a blanket increase to base freight rates, typically announced 30 days before implementation. Carriers use GRI to push rates upward during favorable market conditions. GRI announcements don’t always stick — if demand doesn’t support the increase, carriers may withdraw or reduce it. Experienced forwarders track GRI announcements but wait to see actual market rate movement before adjusting long-term quotes.

PSS — Peak Season Surcharge

PSS applies during high-demand periods — typically May through October on transpacific routes, and August through November for Asia-Europe. PSS can range from $200–$1,000/FEU depending on the trade lane and how tight capacity is.

Negotiation strategy: When signing annual contracts with carriers, include a PSS cap — a maximum surcharge the carrier can charge during peak season. Without a cap, PSS can spiral well beyond what your quotes assumed.

ERR — Emergency Rate Restoration

ERR functions like a GRI but with a shorter notice period and a more aggressive posture. Carriers use ERR when rates have dropped below their target levels and they want to restore them quickly.

Surcharges Specific to Routes and Equipment

SCS — Suez Canal Surcharge

Charged on routes transiting the Suez Canal to cover canal tolls. With Red Sea diversions pushing vessels around the Cape of Good Hope since late 2023, many carriers have replaced SCS with a Cape of Good Hope surcharge or routing adjustment fee that covers the additional fuel and transit time of the longer route.

PCS — Panama Canal Surcharge

Covers Panama Canal transit fees. The canal’s draft restrictions during drought periods (as seen in 2023–2024) can trigger additional surcharges or force route changes.

ECA — Emission Control Area Surcharge

Charged when vessels transit ECAs (Baltic Sea, North Sea, North American coastlines, US Caribbean) where stricter emission standards require cleaner (more expensive) fuel.

Reefer Surcharge

Additional charge for refrigerated containers, covering power supply at the terminal and on the vessel. Reefer surcharges are typically $200–$500/container per move, plus ongoing power charges during dwell time.

OWS — Overweight Surcharge

Applied when a container exceeds the carrier’s standard weight limit (usually around 28–30 tonnes for a 20’ and 26–28 tonnes for a 40’). OWS varies by carrier but expect $150–$500/container.

OOG — Out of Gauge Surcharge

For cargo that exceeds standard container dimensions — flat racks, open tops, or breakbulk on container vessels. OOG surcharges are quoted per case since they depend on how much the cargo extends beyond the container footprint.

Documentation and Administrative Surcharges

BL Fee — Bill of Lading Fee

Charged per B/L issued — typically $30–$75. Seems small, but on an NVOCC operation running hundreds of HBLs per month, BL fees add up. Some carriers charge extra for amendments or switches between original and surrendered B/L.

AMS/ENS Filing Fees

AMS (Automated Manifest System): Required for US-bound cargo. $25–$35 per B/L.
ENS (Entry Summary Declaration): Required for EU-bound cargo under ICS2. $25–$40 per B/L.

These are regulatory requirements, but carriers and NVOCCs charge handling fees for filing them. With the EU’s ICS2 system now fully enforced in 2026, ENS data requirements have expanded, and filing errors can trigger cargo holds — making accurate documentation systems essential.

ISPS — International Ship and Port Facility Security

A post-9/11 security surcharge covering compliance with the ISPS Code. Usually $5–$15/TEU. Small but universal.

CIC — Container Imbalance Charge

Also called Equipment Imbalance Surcharge (EIS). Carriers charge CIC to offset the cost of repositioning empty containers from surplus areas to deficit areas. CIC is common on trade lanes with heavy directional imbalance — for example, moving empties back to Asia after discharging import cargo in South America or Africa.

Managing Surcharges Operationally: Where Forwarders Win or Lose

Understanding surcharges is one thing. Managing them profitably across hundreds of active shipments is where the operational challenge lives.

Quoting with surcharge volatility

The fundamental tension: clients want a firm price, but surcharges change between quote and sailing.

Best practices:

Quote base rate and surcharges separately. Never bundle them. Your quote should show the base rate, BAF, THC, and any applicable surcharges as distinct line items. This creates transparency and makes it easier to explain changes.
Include a surcharge validity period. State explicitly: “Surcharges valid as of [date], subject to change at time of booking.” This is standard practice but many forwarders skip it and then struggle to pass through increases.
Build a surcharge buffer on volatile lanes. On trade lanes affected by diversions or geopolitical risk, experienced forwarders add a small contingency margin to their surcharge estimates rather than quoting the exact current rate.

Invoice reconciliation

Carrier invoices frequently contain surcharges that differ from what was quoted or expected. Common discrepancies:

BAF adjustment between booking and sailing. If the booking was made in one quarter and the vessel sails in the next, BAF may have changed.
New surcharges applied retroactively. Emergency surcharges announced between booking and sailing.
Double-counting. LSS appearing alongside a BAF that already includes a fuel compliance component.
Incorrect surcharge amounts. Carrier billing systems are not infallible — audit every invoice.

Forwarders handling significant volume need systematic invoice auditing. Modern freight forwarding ERPs automate much of this by matching carrier invoices against expected costs per shipment and flagging variances — but even with automation, someone needs to investigate the flags.

Surcharge pass-through contracts

Your agreements with clients should address surcharge pass-through explicitly. Key clauses:

Named surcharge pass-through: List specific surcharges (BAF, WRS, congestion) that are passed through at cost.
Force majeure surcharge language: Allow pass-through of emergency surcharges arising from events outside your control — conflicts, canal closures, pandemics.
Adjustment notice period: Define how much notice you’ll give before passing through a surcharge change (24–72 hours is standard for emergencies, 7–14 days for routine adjustments).

Margin protection on multi-currency surcharges

Surcharges are almost always denominated in USD, but you may be invoicing clients in local currency. The gap between the exchange rate when you received the carrier invoice and when the client pays can erode your margin. In our 11 years working with freight forwarders, we’ve seen this single issue — untracked exchange rate exposure on surcharges — cost mid-sized forwarders tens of thousands annually.

The Current Surcharge Landscape: March 2026

The freight market in March 2026 is navigating a historically complex surcharge environment:

Middle East crisis surcharges: WRS of $1,500–$4,000/container for Gulf cargo, emergency fuel fees of $300–$400/FEU from major carriers, and routing adjustment fees for Cape of Good Hope diversions
Air freight spillover: With Gulf air hubs (Doha, Dubai, Abu Dhabi) disrupted, air rates from Asia to North America are up 20% and Southeast Asia to Europe up 65%, pushing some shippers toward ocean — adding demand pressure on certain lanes
Overcapacity dampening base rates: A wave of newbuild deliveries is pushing base ocean rates down on many trade lanes (Asia-Europe rates dropped 15–21% in February), but surcharges are keeping total costs elevated
Post-Lunar New Year reassembly: Blank sailings and capacity reductions during Chinese New Year are still unwinding, creating uneven service recovery across trade lanes

This creates a paradox forwarders must communicate to clients: base rates may be falling, but total costs per shipment are stable or rising because of surcharges. Clear surcharge itemization in your invoicing is the only way to make this transparent.

Frequently Asked Questions

Who is responsible for paying ocean freight surcharges?

Surcharge responsibility is determined by the agreed Incoterms. Under FOB, the buyer bears freight-related surcharges (BAF, PSS, WRS) from the port of loading. Under CIF, the seller covers freight and origin surcharges, but destination charges (DTHC, demurrage) fall on the buyer. Under DDP, the seller bears all surcharges end to end. The freight forwarder’s role is to clearly allocate each surcharge to the responsible party in both the quote and the invoice.

Can freight forwarders negotiate surcharges with carriers?

Some surcharges are negotiable, others aren’t. THC, BAF, and PSS can often be negotiated — especially with volume commitments or long-term contracts. Annual contracts should include PSS caps and BAF adjustment mechanisms. Regulatory surcharges (AMS, ENS, ISPS) and emergency surcharges (WRS, EBS) are generally non-negotiable. Forwarders moving 500+ TEU annually typically have enough leverage to secure preferential surcharge levels from carriers.

How often do ocean freight surcharges change?

It depends on the surcharge type. BAF adjusts quarterly (some carriers monthly). GRI and PSS are announced 15–30 days before implementation. Emergency surcharges (WRS, EBS) can appear with as little as 24–48 hours notice — as the industry saw with the Strait of Hormuz war risk fees in March 2026. Forwarders should monitor carrier advisory bulletins daily and have processes to update open quotes when surcharges change.

What is the difference between BAF, EBS, and LSS?

All three are fuel-related but serve different purposes. BAF is the standard, recurring fuel adjustment recalculated on a fixed schedule (quarterly or monthly). EBS is an emergency fuel surcharge triggered by sudden price spikes between regular BAF cycles. LSS specifically covers the cost premium of low-sulphur compliant fuel mandated by IMO 2020. Some carriers bundle LSS into BAF; others charge it separately. When both appear on an invoice, verify you’re not being double-charged.

How should forwarders handle surcharges in client quotations?

Always itemize surcharges separately from the base rate — never bundle them into a single “all-in” price. Include a surcharge validity date and a clause reserving the right to adjust surcharges at time of booking. For volatile trade lanes, add a small contingency buffer to surcharge estimates. Quote documents should explicitly state which surcharges are included and which may be passed through at cost. This protects your margin and builds client trust through transparency.

What are the largest surcharges affecting ocean freight in 2026?

The war risk surcharge for Gulf-linked cargo is the single largest surcharge in the current market — $1,500 to $4,000 per container depending on the carrier and equipment type. Beyond WRS, Cape of Good Hope routing adjustments ($200–$500/FEU), emergency fuel fees ($300–$400/FEU), and peak season surcharges on transpacific routes ($200–$1,000/FEU during May–October) are the most significant cost additions. Combined, surcharges on affected trade lanes can exceed the base freight rate itself.

Ocean freight surcharges will only grow more complex as geopolitical risks, environmental regulations, and market volatility intensify. Forwarders who treat surcharge management as a core operational discipline — with clear quoting practices, systematic invoice auditing, and contractual pass-through language — protect their margins and strengthen client relationships. Those who treat surcharges as an afterthought will keep discovering the hard way that a profitable-looking shipment can turn into a loss between the quote date and the settlement date.