What is Dead Freight?

If the charterer cannot provide this quantity on Charter Party, he will be expected to compensate the owner for the loss of revenue resulting from the lack of cargo. This money is known as ‘dead freight’ and calculated in such a way as to ensure that the
owner is in the same position as he would have been if a full cargo had been loaded. When the charterer is not certain whether there will be enough cargo to fill the ship, the freight may be paid as a lump sum, which means that the charterer can load as much or as little cargo as he wants. In this case, there is no contractual obligation to provide a full cargo, so the question of dead freight will not arise.