:max_bytes(150000):strip_icc()/sea-coast-water-ocean-river-ship-536684-pxhere.com1-19cfc66ce52f461793c06dcdc3b5fab1.jpg "What Is an Address Commission? Definition and How It Impacts Vessel Owners")
Key Takeaways
- An address commission is a fee paid by a vessel owner to the charterer to offset chartering costs.
- This fee is common in the shipping industry and can impact the overall cost of shipping goods.
- The term “free of charter” means the address commission fee is waived, reducing shipping expenses for the charterer.
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What Is an Address Commission?
An address commission is a fee paid by vessel owners to charterers. A charterer is a party who owns cargo and rents a vessel to deliver that cargo. The charterer employs a shipbroker who will find the proper ship to deliver it. The shipowner pays the shipbroker a commission for their services.
The shipowner pays the address commission to the charterer. The charterer uses this address commission to cover business costs. The fees incurred by the charterer are reduced by the amount of the address commission as a result. “Free of charter” refers to a shipment for which this fee is waived.
We’ll explain key aspects of address commissions and related terms, offering practical insights for vessel owners and charterers.
How Address Commissions Work: A Detailed Explanation
The type of ship and charter used determine the total fees and address commissions incurred by ship owners and charterers.
For example, a time charter enforces costs that are related to the employment duration of a vessel. A voyage charter’s fees are dependent on the total weight of the cargo being transported.
“Free of address” refers to a shipment that does not require payment of the commission.
