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When a charterer fails to load the vessel fully — supplies less cargo than agreed, supplies it late so that the vessel sails with her holds partly empty, or fails to supply cargo at all — the owner loses part of the freight it expected to earn. English law gives the owner a separate cause of action to recover that loss: deadfreight, literally “freight for cargo that was never loaded”. The claim exists independently of demurrage and, in most cases, can be recovered alongside it.
What deadfreight is
Deadfreight is damages payable by the charterer for failing to load the full cargo required by the charter. The label is misleading: deadfreight is not freight in the technical sense — it is damages for breach of the obligation to supply a full cargo. English courts have repeatedly confirmed this. The measure is the freight the owner would have earned on the missing cargo, less expenses saved by not carrying it.
A practical consequence of the damages-not-freight characterisation: the well-known rule against set-off against freight (under which a charterer cannot reduce freight by setting off counterclaims) does not apply to deadfreight. Counterclaims may be set off in the ordinary way. As for lien on the cargo, modern standard forms — Gencon 1994 clause 8, Synacomex 90 clause 27, Asbatankvoy clause 21 — expressly list deadfreight among the secured claims, and in most voyage charters a contractual lien for deadfreight will therefore exist. It should not, however, be treated as automatic: in practice you need to check the wording of the charter, whether the lien clause has been incorporated into the bill of lading (where the claim is pursued against a holder), and the local law of the port where the lien is actually being exercised.
The charterer’s obligation to provide a full cargo
A deadfreight claim only arises if the charterer has breached the obligation to supply the cargo. Under English law that obligation is absolute and non-delegable: it is not enough for the charterer to show that it exercised reasonable diligence or that the cargo failed to arrive at the port through the fault of third parties. In The Aello [1961] AC 135 the House of Lords expressly rejected the charterer’s argument that “reasonable endeavours” sufficed — Lord Radcliffe held that the supply of cargo is “the charterer’s concern” and that the risk of any delay in obtaining cargo rests on the charterer.
The exact content of the obligation depends on the wording of the charter:
- “Full and complete cargo” without further qualification — the charterer must load as much as the vessel can safely carry, given her assigned freeboard, bunkers and stores. If the charter also specifies minimum and maximum tonnages, the obligation is bounded by those figures — but within that range the charterer must still supply a full and complete cargo.
- Stated quantity with a margin (e.g. “60,000 mt 5% MOLOO” — more or less in owner’s option) — the owner declares the final figure within the margin and that becomes the charterer’s binding quantity.
- “About” a stated quantity — commercial usage gives a tolerance of around 5% either way.
When the charterer supplies less than the agreed minimum, or less than the vessel’s capacity (where capacity is itself the agreed quantity), he is in breach and the owner is entitled to deadfreight.
How deadfreight is calculated
If the charter contains no specific deadfreight clause (the standard Gencon 1994 has none), damages are computed under the ordinary rules.
The basic formula:
Freight that would have been earned on the missing cargo LESS expenses the owner saved by not carrying it (extra bunker, port dues attributable to the extra cargo, additional laytime, if any) LESS net freight the owner actually earned on a fill-up cargo, if one was carried
Mitigation. If the owner could reasonably have loaded a fill-up cargo in place of the missing portion, the owner is bound to do so. English law may even permit the owner to deviate from the direct route to pick up such cargo, where commercially reasonable. If the freight on the fill-up would have exceeded the extra cost of loading and carrying it, the owner’s failure to take that opportunity reduces the deadfreight by the amount it ought to have earned. Where a substitute cargo is in fact taken, whether and how much of the freight on it is to be credited against the deadfreight is fact-sensitive — the general rule looks to the net recovery on the substitute, but on particular routes and trades the actual credit may be less than a mechanical deduction. In practice the fill-up issue arises more on long voyages calling at major ports where alternative cargo is realistically obtainable; on short port-to-port trades with tight scheduling there is usually no opportunity.
Wrong type of cargo. If the charterer loads a different cargo (for example, a commodity attracting a lower freight rate when he was bound to load one attracting a higher rate), deadfreight equals the difference between the freight that would have been earned on the right cargo and the freight actually earned.
Asbatankvoy clause 3: liquidated deadfreight in tanker charters
Tanker forms (Asbatankvoy, Exxonvoy, BPVoy) typically contain a dedicated deadfreight clause. In Asbatankvoy this is clause 3:
Should the Charterer fail to supply a full cargo, the Vessel may, at the Master’s option, and shall, upon request of the Charterer, proceed on her voyage… In that event, however, deadfreight shall be paid at the rate specified in Part I hereof on the difference between the intake quantity and the quantity the Vessel would have carried if loaded to her minimum permissible freeboard for the voyage.
The clause performs two functions. First, it relieves the owner of the duty to look for a fill-up cargo: in the event of short-loading either the Master or the charterer may require the vessel to sail at once, in which case the mitigation obligation falls away. Second, deadfreight is computed by a fixed formula — the full freight rate from Part I applied to the difference between intake quantity and the quantity the vessel would have carried “if loaded to her minimum permissible freeboard for the voyage”, i.e. down to the lowest legally permissible load line for that voyage.
Is this a liquidated damages clause? In The Altus [1985] 1 Lloyd’s Rep 423 Webster J proceeded on the assumption (without finally deciding) that clause 3 operates as a liquidated damages clause and, on that footing, still allowed the owner a separate claim for demurrage lost as a consequence of the short-loading (in that charter, the demurrage rate was tied to the quantity loaded). After The Eternal Bliss (below) the Altus point should be read narrowly: it is not authority for recovering additional damages arising from the same laytime breach absent a separate breach.
Deadfreight and demurrage: can both be recovered
Where the charterer is simultaneously (a) short of the agreed quantity and (b) over laytime, the question is how the two claims interact. The charterer’s typical argument is that demurrage already liquidates all damages flowing from the laytime breach — including the missing freight — and that a separate deadfreight claim is impermissible double recovery.
The answer was settled almost a century ago in Aktieselskabet Reidar v Arcos [1927] 1 KB 352. The charter required loading a full cargo of 850 standards of timber at a White Sea port for delivery to an English port. Because of the delay in loading, the vessel could no longer reach the discharge port by 31 October with a full summer deck cargo and had to sail under winter loadline rules; only 544 of the 850 standards could legally be carried. The owners claimed deadfreight on the 306-standard shortfall and demurrage for the laytime breach. The Court of Appeal allowed both.
The principle: breach of the obligation to supply a full cargo and breach of the obligation to load within laytime are two different breaches. Demurrage liquidates the loss from the second; deadfreight answers for the first. The fact that the two breaches share a common factual cause (slow loading) does not fuse them into one.
In 2021 the Court of Appeal in K Line v Priminds (The Eternal Bliss) [2021] EWCA Civ 1712 (Males LJ) approached the same problem from the other side and confirmed that if the only breach by the charterer is the failure to complete cargo operations within laytime, demurrage liquidates all loss flowing from that delay and the owner cannot recover anything additional. The Court of Appeal was candid that the ratio of Reidar v Arcos on the “one breach / two breaches” question is “obscure”, but it retained the case as authority precisely where the delay is paired with a separate breach — for example, failure to supply a full cargo. In short: deadfreight under Reidar v Arcos remains recoverable, but not because demurrage fails to cover all losses from laytime breach — rather because short-loading is itself an independent breach.
The practical takeaway: where short-loading is accompanied by delay, the owner retains two separate claims — demurrage for breach of the laytime obligation and deadfreight for breach of the obligation to supply a full cargo. Lumping them together as “damages for delay” is legally inaccurate and may cost the owner part of the recovery.
The Archimidis: the “futile” tender of full cargo
AIC Ltd v Marine Pilot Ltd (The Archimidis) [2008] EWCA Civ 175 is the leading modern authority on deadfreight. The tanker was chartered to carry diesel oil from Ventspils to NW Europe with a contractual minimum of 90,000 mt at an agreed 45 ft fresh-water draft. Because of unusually low water in the dredged approach channel, the vessel could physically lift only 67,058 mt alongside; the balance could in theory be topped off by ship-to-ship transfer at anchor after exiting the channel. The charter permitted such a transfer but as an option, not an obligation.
The charterer formally tendered 93,410 mt for loading — more than the contractual minimum of 90,000 mt, within the Part I range — but both sides knew at the time of tender that the full parcel could not be safely loaded at the berth. The arbitrators called the tender “a gesture without legal significance”; the High Court disagreed. The Court of Appeal reversed and restored the arbitrators’ award in the owners’ favour.
Sir Anthony Clarke MR put the rule plainly: a tender on which neither party intends to act — because both know it is physically incapable of being performed — is not a proper tender of a full cargo. The charterer had not supplied the contractual minimum of 90,000 mt → the charterer was in breach of the obligation to supply a full cargo → deadfreight on the difference between 90,000 mt and the 67,058 mt actually loaded was in principle due (paragraph 14 of the judgment).
What this means in practice:
- A tender that is known to be impossible does not protect the charterer. If he knows the declared volume cannot be loaded under the conditions and fails to invoke available options (STS, lightering, waiting for the next tide) to remedy the position, he is in breach even if cargo was “formally tendered”.
- Optional cures become effectively mandatory. The charter allowed STS — the charterer was not strictly obliged to use it, but without it he could not perform the underlying obligation to load. The Court of Appeal did not formally turn the option into a duty, but reached the same result through the absolute supply obligation.
- Draft restrictions at a named port do not, on their own, relieve the charterer of deadfreight. The test remains whether the charterer met the contractual minimum. If that minimum is not delivered (even for an objective reason such as silted approach channels), the charterer is in breach and deadfreight is recoverable.
When deadfreight is not recoverable
A handful of situations in which the owner will not recover deadfreight despite a formal short-loading.
Charterer has lawfully cancelled. If the vessel was not ready to load by the cancelling date and the charterer validly exercised the cancelling option before loading began, the deadfreight claim falls away — the charter is brought to an end before the cargo-supply obligation is to be performed. By analogy: if the owner anticipatorily repudiated and the charterer did not accept that repudiation, the charterer retains the cancelling right at laycan, and if it is properly exercised deadfreight is again unrecoverable. The status of the cancelling option as an independent contractual right (rather than a remedy for breach) is confirmed in The Simona [1989] AC 788, discussed previously on this blog in the article on the cancelling clause.
Cargo lost to an excepted peril after loading. If the cargo was duly provided and loaded, and part of it is then damaged or destroyed by an excepted peril (fire, force majeure), the charterer is generally under no further absolute obligation to replace it. The space freed up is usually available to the owner, who may load other cargo and retain the freight on it; no deadfreight arises. Whether substitution is permitted and how the freed-up space is allocated will depend on the charter terms, the stage of the voyage, and the practical feasibility of safe loading.
Lump sum freight. Under a lump sum freight charter (a fixed amount per voyage regardless of cargo carried) deadfreight has no standalone role — the owner is paid the lump sum in any event, and the phrase “full and complete cargo” in a lump sum context entitles, but does not oblige, the charterer to use the whole of the vessel’s capacity. The exception is where the lump sum is tied to an owner-guaranteed minimum and the charterer has a right to require top-up to that minimum.
Misdescription of vessel’s capacity. If the owner misdescribed the vessel’s capacity in the charter and the charterer failed to load what he expected, the breach is the owner’s, not the charterer’s. Deadfreight is not recoverable and the charterer may be entitled to a freight refund.
Practical takeaways
If short-loading is on the horizon, the owner should:
- Document the cause of the shortfall before sailing. A master’s letter of protest with detailed particulars is the standard. State the quantity tendered by the charterer, the quantity actually loaded, the cause of the gap, and the charterer’s response to the demand for further cargo.
- Document the tender (or its absence). If the charterer did not formally tender cargo, or tendered a quantity known to be impossible, capture this in the SOF and the letter of protest.
- Do not waive a realistic fill-up silently. If the owner could reasonably have taken alternative cargo and chooses not to, a tribunal may reduce the deadfreight by what he should have earned.
For the charterer:
- Document the impossibility of loading (draft survey, port authority letters, supplier failure) — material for arguments on excepted perils, force majeure or frustration.
- Use the charter’s optional cures (substitution, STS, alternative berth). The Archimidis shows that failing to invoke an available option, while the primary tender is impossible, is treated as a breach of the underlying supply obligation.
If you have any questions about deadfreight, short-loading or other voyage charter issues, or you need assistance with a claim or defence, please get in touch:
