Dead Freıght

Dead Freight is the compensation that a shipper or charterer pays to the carrier or shipowner for not fully utilizing the agreed cargo space on a vessel or aircraft. Dead Freight is often found in charter parties and liner terms to protect the shipowner for reserving a vessel, equipment or cargo space. To understand the dynamics of dead freight, it’s important to take a closer look at the role of the shipper or charterer (the party who charts a vessel or books vessel space) and the carrier or shipowner (the party who supplies the vessel or vessel space). 

Both parties will typically formalize and sign a service or charter agreement (also known as a charter party), that binds both parties to their responsibilities.

Both parties will typically formalize and sign a service or charter agreement (also known as a charter party), that binds both parties to their responsibilities. 

Oftentimes, a dead freight clause is included into the terms and conditions of service contracts or charter agreements, so that the carrier or shipowner is able to recover lost revenue due to the inability of the shipper to fulfill the agreed cargo load or to fully utilize the reserved vessel space.