Commissions and Brokerages

The shipowner pays the broker a commission calculated as a percentage of the gross freight payable to the shipowner as per the voyage charter party terms. There are two types of commission payable-the address commission and the brokerage. This income is payable by the shipowner to all the brokers involved in the fixture. An address com- mission is charged by the charterer and payable by the shipowner. The address commission ranges from 1.25 to 5 percent. Brokerage com- mission normally amounts to 1.25 percent of gross freight. Normally,
a shipowner will estimate in advance the costs associated with the address and brokerage commissions and will take those into account when making a freight rate quote. Each ship broker may be entitled to an equivalent percentage of the gross amount of any deadfreight or demurrage. Deadfreight is income related to the difference between the  volume  of cargo  agreed  to be delivered  and  that  actually  deliv- ered, i.e. short  cargo delivery. However, a ship broker’s  right to receive income  based  on deadfreight   or demurrage   must  be specifically  re- corded  in a charter  party.