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 commission is charged by the charterer and payable by the shipowner. The address commission ranges from 1.25 to 5 percent. Brokerage commission 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 shipbroker may be entitled to an equivalent percentage of the gross amount of any dead-freight or demurrage. Deadfreight is income related to the difference between the volume of cargo agreed to be delivered and that actually delivered, i.e. short cargo delivery. However, a ship broker’s right to receive income based on dead freight or demurrage must be specifically recorded in a charter party.