Deadfreight. Deadfreight is payable on cargo agreed by charterers to be shipped but not actually shipped. As a rule it is up to the master to declare in writing the maximum quantity of cargo his vessel can load.
If charterers fail to ship the quantity of cargo declared by the master, the compensation far the quantity of cargo “short shipped” is called deadfreight. The space or deadweight capacity that the charterer has failed to use, but on which freight is nevertheless due, is regarded as being “dead” or lost.
When settling deadfreight, the expenses, which would have to be borne by the shipowners according to the condition of the charterparty, for instance loading, or discharging expenses, will be deducted. Clearly, there is no reason why shipowners should be compensated for the freight they have lost because the charterers has not loaded the agreed cargo, and also be able to save any loading and discharging expenses, if the charter is not, for example, on FIOST terms (where cargo is loaded, discharged, stowed and trimmed free of expenses to the shipowner.)
Deadfreight is the compensation payable to the shipowner not only because of the cargo short shipped by the charterer but also if the nature of the cargo prevents the full capacity of the ship to be used. If, for example, the shape of general cargo is such that some of the ship’s space in the cargo compartment is wasted, this is termed “broken stowage” and deadfreight would be payable for the reduction in total quantity caused by this.
Deadfreight. Normally this expression refers to the compensation to be paid by the user of a vessel to the vessel owner. In liner services it is used especially, but for the same purpose, to indicate the compensation payable by a shipper who does not fulfill his minimum cargo quantity obligations under a service contract.