Freight Charge

(Russian, frakht), the payment made to the owner of a means of transport in return for the shipping of freight or the transport of passengers. The freight charge is usually paid by the shipper—that is, the party that has concluded a shipping contract with a carrier, who assumes the obligation of shipping the cargo from one point to another.

The concept of a freight charge applies to shipping on various forms of transport, including oceangoing ships, river vessels, motor vehicles, and airplanes, but the term is most commonly used in maritime shipping. In certain cases the freight charge includes not only payment for the actual transport of goods or passengers, but also, depending on the terms of the contract, a payment for loading and unloading.

In tramp shipping operations in the capitalist countries, the charge for shipping services is a freight rate agreed upon when the shipping contract is drawn up; the rate is subject to market forces. In liner operations, the charge for services takes the form of shipping tariffs that remain valid for a fixed period of time and that are generally set unilaterally by shipping firms.

In the USSR, the freight charge for shipping the cargo of Soviet foreign trade organizations is imposed in accordance with tariffs agreed upon by the carrier and the owner of the cargo.

A contract states when the freight charge shall be paid; payment is usually made upon delivery of the cargo. The charge is computed by multiplying the shipping rate (the freight rate or tariff) stipulated in the shipping contract by the amount of cargo delivered to its destination or by the amount of cargo accepted for loading at the point of origin. In those cases where it is difficult to determine in advance the amount of cargo to be shipped, the contract names a total freight charge for one voyage rather than a freight rate.

In a time charter, a ship is hired for a stated period of time. The shipper is charged per ton deadweight per month or at a daily rate of hire.