What is Dead Freight?
If the charterer cannot provide this quantity on Charter Party, the charterer will be expected to compensate the Shipowner for the loss of revenue resulting from the lack of cargo. This money is known as Dead Freight.
Dead Freight is calculated in such a way as to ensure that the Shipowner 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.