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 the cargo. 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.

As a result, the fees incurred by the charterer are reduced by the amount of the address commission.

Key Takeaways

  • An address commission is a fee paid by the owner of a vessel to the charterer who rents the vessel.
  • The fee offsets the costs to the charterer.
  • "Free of charter" refers to a shipment for which this fee is waived.

Understanding an Address Commission

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.