What is Freight?

What is Freight?

Freight is the reward payable to the Carrier (Shipowner or Ship Operator) for the carriage and arrival of the goods in a merchantable condition, ready to be delivered to the merchant.

Under a simple contract to pay freight, no freight is payable if the goods are lost on the voyage or for any other reason, except the fault of the merchant alone, are not delivered at the port of destination.

Typically a consignee is not entitled to take delivery of the goods unless freight has been paid. Freight payable may be stated on a Bill of Lading (B/L) or Charterparty and we will concentrate on the charterparty. It will be useful to consider what the shipowner does for the freight.

In The Johanna Oldendorff Lord Diplock identified the operations in the adventure contemplated in the voyage charter so that when a ship is chartered under a voyage charter the charterer pays the shipowner freight. In return the ship performs four basic operations which comprise the voyage and form the contractual consideration:

Operation Costs included in the Freight

1. Ballast to load port Distance steamed plus preparation for cargo
2. Load cargo Agreed Laytime and port costs, securing cargo
3. Laden voyage Distance steamed plus care of cargo
4. Discharge cargo Agreed Laytime and port costs

These stages are consecutive and each must be completed before the next can begin.
There cannot therefore be any gap between them, nor is there any overlap.

Freight Clause 

Within a Voyage Charterparty the Freight Clause should stipulate:

1. The amount of freight and/or its method of calculation
2. When freight becomes due
3. Method of transfer to shipowner’s bankers
4. Exact details of shipowner’s bankers.