Deadfreight in Shipping: Meaning, Calculation & Examples

Chartering · Academy · Voyage Economics

Deadfreight in shipping is the compensation an owner may claim when a voyage charterer fails to provide the contractual cargo quantity and the vessel sails with freight-earning capacity unused. The arithmetic can look simple, but the real claim depends on the charterparty quantity wording, who holds the cargo option, the vessel’s actual loadable intake, port and draft restrictions, the freight basis, mitigation and the evidence created during loading.

What Is Deadfreight in Shipping?

Deadfreight in shipping arises when the commercial bargain assumes that a defined cargo quantity will be loaded, but charterers provide less than the quantity they are contractually obliged to supply. The vessel may then sail with unused carrying capacity and the owner loses freight that would otherwise have been earned.

The Shipowners’ Club describes deadfreight as damages an owner may claim under a voyage charterparty when charterers fail to load the full quantity stipulated by the charter. BIMCO training material likewise treats payment of freight and deadfreight as part of the charterer’s core voyage-charter obligations.

This is why deadfreight belongs primarily to the voyage-charter side of commercial shipping. Under a voyage charter, freight is often linked directly to the amount of cargo carried — for example, USD 28 per metric tonne. If the promised cargo is missing, a direct revenue shortfall can arise.

For the wider contract structure, Tide Signal’s Voyage Charter vs Time Charter guide explains why voyage-charter freight and time-charter hire allocate commercial risk differently.

Deadfreight Calculation Formula

The basic commercial calculation is:

In practice, a professional calculation normally requires four questions:

1. What quantity was charterers contractually required to provide?
2. How much cargo was actually loaded?
3. What freight or deadfreight rate applies to the missing quantity?
4. Does the charter require any adjustment for expenses saved, substitute cargo or another contractual mechanism?

The simple multiplication is therefore the final stage, not the starting stage.

Step One: Establish the Contractual Cargo Quantity

The most important number in a deadfreight claim is not automatically the vessel’s maximum deadweight or the figure a charterer originally hoped to ship. It is the contractual quantity.

Cargo wording can take several forms:

The wider contractual framework is explained in Tide Signal’s Charterparty in Shipping and Types of Charter Parties guides.

MOLOO vs MOLCO: Who Controls the Cargo Tolerance?

MOLOO — More or Less in Owners’ Option

MOLOO gives the owner the contractual quantity option within the stated tolerance, subject to the exact recap and the vessel’s safe and lawful ability to carry the quantity declared. In practice the Master may issue a loadable quantity declaration after considering draft, deadweight, stability, bunkers, ballast, water density, port limits and the cargo’s stowage characteristics.

Example:

If the freight rate is USD 28/MT, the starting gross calculation is:

Whether USD 98,000 is the final recoverable figure depends on the contract. An express deadfreight clause may provide its own measure. Without one, ordinary damages principles may require adjustments.

MOLCO — More or Less in Charterers’ Option

MOLCO places the quantity option with charterers within the agreed range. That changes the analysis completely.

Assume:

On those simplified assumptions, the fact that the vessel could physically carry 55,000 MT does not by itself create an 8,000-MT deadfreight claim. Charterers have exercised their contractual quantity option and supplied the quantity selected.

What Does “Full and Complete Cargo” Mean for Deadfreight?

Some voyage charters do not use a single fixed quantity. Instead they require a full and complete cargo. That makes the vessel’s actual carrying capability much more important.

The analysis may need to consider:

• summer, winter or tropical load line;
• load-port and discharge-port draft limits;
• channel or tidal restrictions;
• dock-water density;
• bunkers, freshwater, stores and constants;
• ballast requirements;
• trim and stability;
• shear force and bending moment limits;
• hold or tank capacity;
• cargo stowage factor or density;
• cargo segregation requirements;
• air-draft or berth limitations;
• the Master’s safe-loading judgement.

A claim cannot be analysed from deadweight alone. A ship may have theoretical deadweight available but be limited by cubic capacity, port draft, water density or safe cargo distribution.

Tide Signal’s Pre-Stowage Planning guide explains how operators and vessels estimate safe cargo intake before arrival, while the Draft Survey in Shipping guide explains how loaded cargo quantity is verified operationally.

The Owner Must Be Able to Support the Loadable Quantity

A deadfreight claim becomes much weaker if the “missing” cargo could not in fact have been loaded safely and lawfully.

Suppose an owner claims that the vessel could take 65,000 MT. If the port’s departure draft means the ship could only safely sail with 62,000 MT, the contractual and factual basis of a claim above that figure requires careful scrutiny.

The same applies where:

• the declared cargo quantity ignores a known berth restriction;
• the stowage factor makes the cargo volume-limited;
• the vessel must retain additional bunkers for the voyage;
• the nominated discharge port has a lower arrival-draft restriction;
• the ship’s holds or tanks are not ready for the full quantity;
• the owner’s own operational decision creates the shortfall.

Steamship Mutual’s commentary on cargo shortfall litigation illustrates how tide and port restrictions can become central when deciding whether a ship should have loaded more cargo or sailed when she did.

Deadfreight in Shipping: 7 Worked Examples

Does Deadfreight Apply When Freight Is Lump Sum?

This is one of the most useful distinctions in practice. The Shipowners’ Club explains that deadfreight applies where freight is set by reference to cargo quantity and states that conventional deadfreight does not accrue where lump-sum freight is payable.

Commercially, the reason is straightforward. If the agreed freight for the voyage is a fixed USD 1.2 million regardless of whether the final cargo is 48,000 MT or 50,000 MT within the contractual arrangement, there may be no lost per-tonne freight to calculate in the usual way.

That does not mean cargo quantity becomes legally irrelevant. The owner may still have other contractual rights if charterers breach a cargo obligation, but the claim should not automatically be labelled or calculated as standard quantity-based deadfreight.

Saved Expenses, Fill-Up Cargo and Mitigation

Where the charter does not provide a specific liquidated deadfreight formula, ordinary damages principles can become important. The Shipowners’ Club and Gard both explain deadfreight as compensation for lost freight where the full agreed cargo is not supplied.

The ordinary damages approach may require credit for:

• extra bunker expenditure avoided because the vessel carried less weight;
• cargo-related port or handling expenses saved;
• other incremental costs that would have been incurred only on the missing cargo;
• net benefit from substitute or fill-up cargo where legally relevant.

Owners also need to consider mitigation. West P&I guidance notes that an owner may be required to take reasonable steps to obtain fill-up cargo where the additional freight would exceed the additional costs of loading, carrying and discharging it.

The practical question is not whether some cargo existed somewhere in the market. It is whether a suitable replacement parcel was realistically available on commercially reasonable terms without creating disproportionate delay, cost, risk or breach of the original fixture.

Deadfreight vs Demurrage vs Despatch

For the port-time side of the voyage, continue with Tide Signal’s Laytime and Demurrage in Shipping and Despatch in Shipping guides.

The Notice of Readiness, Statement of Facts and Laycan guides complete the main voyage-charter timeline.

Deadfreight in Dry Bulk Shipping

Dry bulk trades are especially exposed because cargo quantities are often large and small percentage differences become large dollar amounts.

A 2% shortfall on a 75,000-MT Panamax parcel is 1,500 MT. At USD 32/MT, that represents USD 48,000 of gross freight value before considering the charter’s deadfreight wording or damages adjustments.

Common causes of dry-bulk short loading include:

• insufficient stockpile at the terminal;
• shipper or supplier failure;
• incorrect pre-arrival cargo forecast;
• moisture or density changes;
• draft restriction;
• stowage-factor error;
• load-line limitation;
• discharge-port draft limitation;
• late cargo nomination;
• cargo quality rejection;
• survey disagreement;
• commercial decision to sail short.

The cause matters because it helps determine whether the shortfall belongs contractually to charterers, owners or neither party under an applicable exception.

Deadfreight in Tanker Chartering

Deadfreight is not limited to dry bulk. Tanker voyage charters can also produce significant claims where the nominated cargo quantity is not supplied.

Tanker intake may depend on:

• cargo density and temperature;
• tank capacity;
• segregation requirements;
• slop retention;
• load-line and draft limits;
• terminal restrictions;
• cargo compatibility;
• tank readiness and certification.

BIMCO’s tanker charterparty training specifically treats payment of freight and deadfreight as part of the charterer’s voyage-charter obligations.

ASBATANKVOY is particularly important because it contains express deadfreight wording. Where an agreed form provides a contractual formula, the operator should calculate under that mechanism rather than automatically importing the ordinary net-damages method.

Deadfreight and the Bill of Lading Quantity

Cargo quantity evidence can become complicated when shore figures, draft surveys, mate’s receipts and bills of lading do not agree.

Steamship Mutual has highlighted arbitration involving a significant difference between shore-scale figures and draft-survey results, demonstrating why Masters and operators should not treat a quantity discrepancy as a paperwork detail.

The commercial file may need to reconcile:

• shore scale or terminal figure;
• initial and final draft survey;
• mate’s receipt;
• bill of lading quantity;
• cargo manifest;
• Master’s letter of protest;
• charterer’s quantity declaration;
• loading completion statement.

For a technical explanation of how vessel displacement is converted into cargo quantity, see Tide Signal’s Draft Survey in Shipping: Calculation, Formula & Worked Example.

Deadfreight Claim Evidence Checklist

Practical Operator Workflow When Cargo Is Short

1. Read the quantity clause first. Identify minimum quantity, tolerance, option holder and any “full and complete cargo” wording.
2. Confirm the Master’s safe loadable quantity. Do not rely on a commercial target unsupported by vessel calculations.
3. Check all port and voyage restrictions. Load-port draft, sailing tide, discharge-port limits and bunker requirements may cap intake.
4. Record charterers’ nomination. Timing and wording can matter, especially under MOLCO.
5. Measure the actual loaded cargo carefully. Reconcile draft survey, shore figures and shipment documents.
6. Issue a protest if appropriate. State the contractual quantity, actual quantity and apparent shortfall without making unsupported legal conclusions.
7. Ask why cargo is unavailable. The cause may affect contractual responsibility.
8. Consider fill-up cargo and mitigation. Document whether suitable replacement cargo exists and why it is or is not commercially reasonable.
9. Apply the correct calculation method. Express deadfreight clause first; ordinary damages analysis only where appropriate.
10. Preserve the full file. A later claim may depend more on contemporaneous evidence than on the final invoice.

The commercial effect should also be fed back into the vessel’s Voyage Estimation. Less cargo means less freight revenue, but it may also mean slightly different bunker consumption, port time, draft and voyage economics.

Common Deadfreight Mistakes

• Using the vessel’s maximum deadweight as the contractual quantity. The charterparty comes first.
• Ignoring MOLOO or MOLCO. The option holder can change the benchmark completely.
• Assuming unused space automatically creates a claim. Spare capacity is not the same as contractual shortfall.
• Ignoring draft and port limits. The ship must actually be able to carry the alleged missing cargo.
• Using gross freight without checking saved expenses. This may overstate ordinary damages.
• Ignoring an express deadfreight clause. A contractual formula can displace the ordinary approach.
• Confusing deadfreight with demurrage. One concerns cargo quantity; the other concerns port time.
• Failing to mitigate. Reasonably available fill-up cargo may matter.
• Letting quantity documents conflict without protest. Draft survey, shore figures and B/L quantity should be reconciled immediately.
• Waiting until after sailing to build the claim file. Evidence is strongest when created contemporaneously.

Tide Signal Analysis: Deadfreight Is a Quantity-Risk Clause With a Freight Consequence

Deadfreight looks like a freight calculation, but its real foundation is risk allocation.

The owner commits vessel capacity. The charterer commits cargo. The charterparty decides how much cargo must be supplied, who controls any tolerance and what happens when the quantity is not there.

The strongest operator does not begin with the calculator. The strongest operator begins with the recap.

Only after the contractual quantity is clear should the team move to loadable intake, port restrictions, actual loaded quantity, freight rate, mitigation and the final claim.

Deadfreight in Shipping: Frequently Asked Questions