# Deadfreight Calculation and Example

In dry bulk chartering, Deadfreight Calculation and Example:

Captain (Master) declares ship can load: 52,000 mtons
Charterers supply: 50,000 mtons
Freight rate: \$50 per mton
Shipowners will invoice for a total of 52,000 mtons as follows:
Freight (on cargo loaded) 50,000mt x \$50 per mton = \$2,500,000
Deadfreight (on cargo not supplied)
2,000 mtons x \$50 per mton = \$100,000
Total = \$2,600,000

## Deadfreight Calculation in Dry Bulk Chartering

In dry bulk ship chartering, deadfreight refers to the monetary compensation owed by the charterer to the shipowner when the actual cargo loaded is less than the agreed upon minimum quantity, as stipulated in the charter party agreement. Deadfreight is generally calculated based on the difference in weight between the minimum agreed quantity and the actual loaded cargo, multiplied by the agreed freight rate.

### Deadfreight Calculation Example 1 in Dry Bulk Ship Chartering

Here’s an example of how to calculate deadfreight in a dry bulk ship chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a dry bulk carrier.
2. The minimum agreed quantity of cargo to be loaded is 50,000 metric tons (MT) of coal.
3. The actual cargo loaded turns out to be 48,000 MT.
4. The agreed freight rate is USD 25 per MT.

Calculation:

1. Determine the difference in weight between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 50,000 MT – 48,000 MT Difference = 2,000 MT
2. Calculate the deadfreight amount based on the difference in weight and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 2,000 MT x USD 25 per MT Deadfreight = USD 50,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 50,000 due to the 2,000 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 2 in Dry Bulk Ship Chartering

Here’s another example of how to calculate deadfreight in a dry bulk ship chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a dry bulk carrier.
2. The minimum agreed quantity of cargo to be loaded is 35,000 metric tons (MT) of grain.
3. The actual cargo loaded turns out to be 33,500 MT.
4. The agreed freight rate is USD 18 per MT.

Calculation:

1. Determine the difference in weight between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 35,000 MT – 33,500 MT Difference = 1,500 MT
2. Calculate the deadfreight amount based on the difference in weight and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 1,500 MT x USD 18 per MT Deadfreight = USD 27,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 27,000 due to the 1,500 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 3 in Dry Bulk Ship Chartering

Here’s a third example of how to calculate deadfreight in a dry bulk ship chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a dry bulk carrier.
2. The minimum agreed quantity of cargo to be loaded is 60,000 metric tons (MT) of iron ore.
3. The actual cargo loaded turns out to be 57,800 MT.
4. The agreed freight rate is USD 14 per MT.

Calculation:

1. Determine the difference in weight between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 60,000 MT – 57,800 MT Difference = 2,200 MT
2. Calculate the deadfreight amount based on the difference in weight and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 2,200 MT x USD 14 per MT Deadfreight = USD 30,800

In this example, the charterer owes the shipowner a deadfreight payment of USD 30,800 due to the 2,200 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 4 in Dry Bulk Ship Chartering

Here’s a fourth example of how to calculate deadfreight in a dry bulk ship chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a dry bulk carrier.
2. The minimum agreed quantity of cargo to be loaded is 80,000 metric tons (MT) of bauxite.
3. The actual cargo loaded turns out to be 78,500 MT.
4. The agreed freight rate is USD 12 per MT.

Calculation:

1. Determine the difference in weight between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 80,000 MT – 78,500 MT Difference = 1,500 MT
2. Calculate the deadfreight amount based on the difference in weight and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 1,500 MT x USD 12 per MT Deadfreight = USD 18,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 18,000 due to the 1,500 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 5 in Dry Bulk Ship Chartering

Here’s a fifth example of how to calculate deadfreight in a dry bulk ship chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a dry bulk carrier.
2. The minimum agreed quantity of cargo to be loaded is 45,000 metric tons (MT) of limestone.
3. The actual cargo loaded turns out to be 43,200 MT.
4. The agreed freight rate is USD 20 per MT.

Calculation:

1. Determine the difference in weight between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 45,000 MT – 43,200 MT Difference = 1,800 MT
2. Calculate the deadfreight amount based on the difference in weight and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 1,800 MT x USD 20 per MT Deadfreight = USD 36,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 36,000 due to the 1,800 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

# Deadfreight Calculation in Tanker Chartering

In tanker chartering, cargo quantity is often described as a minimum quantity with charterers having the option to load up to a full cargo. In order to reduce the charterer’s risk of paying deadfreight a clause such as follows may be agreed in tanker chartering:

“Minimum 50,000 mtons, charterers option up to full cargo, no deadfreight for charterers account provided minimum quantity supplied”

Captain (Master) calls for 52,000 mtons. But, charterers able to supply only 50,000 mtons is supplied, no deadfreight is payable because the minimum cargo has been supplied. If charterers had supplied less than minimum according to clause in chater party, for example 48,000 mton is loaded, then deadfreight would be payable on the 2,000 mton shortfall.

In the tanker chartering, if a minimum cargo quantity has been agreed, for example:

“minimum 150,000 mtons, 1-2 grades no heat crude oil, within ship’s natural segregation, charterers option up to full cargo, no deadfreight for charterers account provided minimum quantity supplied.”

Tanker chartering freight calculation there is phrase: overage at 50%. For example, freight payment clause states: “Freight WS120, overage at 50%”. If a tanker is loaded 160,000 mtons of cargo, the freight on 150,000 mtons will be at WS120, in other words 120% of the Worldscale Flat Rate, and the freight on the overage, in this example 10,000 mtons, will be at 50% of WS120, in this example WS60. Assume that tanker Flat Rate is \$20 per mton, the freight is calculated on the quantity loaded as follows:

Flat Rate \$20 per mton
WS120 = \$24 per mton
WS60 = \$12 per mton
Tanker Rate Payable: \$24 per mton x 150,000 mtons = \$3,600,000
Overage Payable: \$12 per mton x 10,000 mtons = \$120,000
Total Tanker Freight Payable = \$3,720,000

Fundamental reason to add overage at 50% is probably to encourage the charterer to supply more cargo if that can be arranged. Charterer has the benefit of a reduced freight rate on the additional cargo and shipowner will earn additional freight over the minimum originally anticipated. Carrier must take care when it appears that all the cargo will not be provided by the shippers, leading to the possibility of a deadfreight claim. Charterer must be made aware of the situation, so that more cargo can be produced from another source. If possible, captain (master) of the tanker should enter a remark on the Bills of Lading (B/L), to the effect that deadfreight will be payable. Hence, a third party Bills of Lading (B/L) holder, who may be paying the tanker freight, will be aware that freight will be payable on a quantity greater than that shown on the Bills of Lading (B/L).

### Deadfreight Calculation Example 1 in Tanker Chartering

In tanker chartering, deadfreight refers to the monetary compensation owed by the charterer to the shipowner when the actual cargo loaded is less than the agreed upon minimum quantity, as stipulated in the charter party agreement. Deadfreight is generally calculated based on the difference in volume between the minimum agreed quantity and the actual loaded cargo, multiplied by the agreed freight rate.

Here’s an example of how to calculate deadfreight in a tanker chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a tanker.
2. The minimum agreed quantity of cargo to be loaded is 90,000 metric tons (MT) of crude oil.
3. The actual cargo loaded turns out to be 88,000 MT.
4. The agreed freight rate is USD 10 per MT.

Calculation:

1. Determine the difference in volume between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 90,000 MT – 88,000 MT Difference = 2,000 MT
2. Calculate the deadfreight amount based on the difference in volume and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 2,000 MT x USD 10 per MT Deadfreight = USD 20,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 20,000 due to the 2,000 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 2 in Tanker Chartering

Here’s a second example of how to calculate deadfreight in a tanker chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a tanker.
2. The minimum agreed quantity of cargo to be loaded is 120,000 metric tons (MT) of refined petroleum products.
3. The actual cargo loaded turns out to be 117,500 MT.
4. The agreed freight rate is USD 8 per MT.

Calculation:

1. Determine the difference in volume between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 120,000 MT – 117,500 MT Difference = 2,500 MT
2. Calculate the deadfreight amount based on the difference in volume and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 2,500 MT x USD 8 per MT Deadfreight = USD 20,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 20,000 due to the 2,500 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 3 in Tanker Chartering

Here’s a third example of how to calculate deadfreight in a tanker chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a tanker.
2. The minimum agreed quantity of cargo to be loaded is 75,000 metric tons (MT) of liquid natural gas (LNG).
3. The actual cargo loaded turns out to be 72,000 MT.
4. The agreed freight rate is USD 15 per MT.

Calculation:

1. Determine the difference in volume between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 75,000 MT – 72,000 MT Difference = 3,000 MT
2. Calculate the deadfreight amount based on the difference in volume and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 3,000 MT x USD 15 per MT Deadfreight = USD 45,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 45,000 due to the 3,000 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 4 in Tanker Chartering

Here’s a fourth example of how to calculate deadfreight in a tanker chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a tanker.
2. The minimum agreed quantity of cargo to be loaded is 50,000 metric tons (MT) of heavy fuel oil.
3. The actual cargo loaded turns out to be 48,500 MT.
4. The agreed freight rate is USD 12 per MT.

Calculation:

1. Determine the difference in volume between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 50,000 MT – 48,500 MT Difference = 1,500 MT
2. Calculate the deadfreight amount based on the difference in volume and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 1,500 MT x USD 12 per MT Deadfreight = USD 18,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 18,000 due to the 1,500 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.

### Deadfreight Calculation Example 5 in Tanker Chartering

Here’s a fifth example of how to calculate deadfreight in a tanker chartering scenario:

Scenario:

1. A shipowner and a charterer agree on a voyage charter for a tanker.
2. The minimum agreed quantity of cargo to be loaded is 200,000 metric tons (MT) of crude oil.
3. The actual cargo loaded turns out to be 195,000 MT.
4. The agreed freight rate is USD 7 per MT.

Calculation:

1. Determine the difference in volume between the minimum agreed quantity and the actual loaded cargo: Difference = Minimum agreed quantity – Actual loaded cargo Difference = 200,000 MT – 195,000 MT Difference = 5,000 MT
2. Calculate the deadfreight amount based on the difference in volume and the agreed freight rate: Deadfreight = Difference x Agreed freight rate Deadfreight = 5,000 MT x USD 7 per MT Deadfreight = USD 35,000

In this example, the charterer owes the shipowner a deadfreight payment of USD 35,000 due to the 5,000 MT shortfall in the actual loaded cargo compared to the minimum agreed quantity.