What is dead freight?
Dead freight is a fee charged by the carrier when the shipper has reserved a certain amount of cargo space but does not deliver the full amount of goods. These costs can occur in sea, air, road or rail transportation, especially with fixed bookings or long-term contracts. In this case, the carrier is entitled to compensation for the unused space, as it cannot be used for other shipments, thus reducing potential revenue.
Frequently asked questions (FAQ)
1. When is dead freight charged?
Dead freight occurs in transportation when the shipper reserves more space than they will actually use. For example, in sea freight, this is when a full container (FCL) or a certain part of a less-than-container load (LCL) has been booked but the full amount of cargo has not been delivered. In aviation, this happens when a carrier accepts a booking but the shipper does not deliver all the goods. Similarly, in road and rail transportation, this happens when a full truck (FTL) or wagons are booked but the available space is not used.
2. How is the dead freight charge calculated?
The dead freight charge depends on the transportation contract. It can be charged for missing space in cubic meters (m³) or square meters (m²), for undelivered weight (tons, kilograms), or as a fixed fee specified in the contract. This amount compensates the carrier for the loss of income that he could have earned by transporting other loads.
3. How to avoid dead freight charges?
The most important thing is to plan shipments precisely so that all the reserved space is actually used. It is worth negotiating flexible contract terms with the carrier, allowing you to modify or cancel the booking if the actual amount of cargo turns out to be less. Maintaining ongoing communication with the carrier and informing them of changes early on can also help avoid penalties.
4. What are the consequences of dead freight?
Dead freight generates additional costs for shippers and can also cause problems in the relationship with the carrier, making future cooperation more difficult. For the carrier, this means a potential loss of income, the need to reorganize routes, and less efficient use of resources.
5. In which industries does the problem of dead freight occur most frequently?
E-commerce and retail often struggle with dead freight because the fluctuating demand for cargo space can lead to unused bookings. In heavy industry, delays in production can result in the non-delivery of full batches of goods. In food transportation, on the other hand, logistical issues such as short product shelf life can contribute to the occurrence of dead freight.
