The bad news is that the 0.25% adjustment will cost you
about US$1.75 per container extra, against a northbound
basic freight rate of US$700
THERE IS good and bad news for the shipper - although none of it of headline status - in the Europe Southern Africa Conference zeroing-out its currency adjustment factor (CAF) on the trade.
As a form of forward cover, and a supposed safety margin for the shipping lines on the Europe run, it has been sitting at -0.25% for some time. A level which the lines have hinted at as being a nuisance - with the cost of calculating and invoicing the sum considered greater than the amount received.
The CAF mechanism was there to protect freight rates from currency fluctuations, Steve Pollington, at the conference offices in London, told FTW this week.
But, as the Euro has come in as the single currency - rather than the 11 separate national currencies of the past - there is now a stability in the currency exchange market. Instead of these currencies fluctuating one-against-the-other they will now move en-bloc against our tariff currency, the US dollar, said the conference.
This justified the setting of the CAF to zero - effective since February 1.
The bad news is that the 0.25% adjustment will cost you about US$1.75 per container extra, against a northbound basic freight rate of US$700.
But, said Pollington, the good news for shippers is that - now that we've zeroed it out, and with the stability of the Euro - the CAF is unlikely ever to be re-introduced.
Not that it's impossible. The conference is retaining the right to apply the CAF, and will be continually monitoring the level of CAF potentially applicable.
But, Pollington added, there needs to be a two percentage points swing to the potential CAF level for a change to be made - and the conference feels that a period of much-needed stability will ensue.
By Alan Peat
