Address Commission
Address Commission is a commission, expressed as a percentage of the freight, hire or deadfreight, that the charterer deducts for its own benefit when paying the owner under a charter. Unlike brokerage (which goes to the shipbroker for arranging the deal), address commission effectively functions as a rebate or discount to the charterer itself — historically linked to a charterer's in-house or “house” brokerage.
It is one of the deductions from freight agreed in the charter party, alongside brokerage commission. For example, a charter might provide for “3.75% address commission and 1.25% brokerage”, both deducted from the gross freight. Address commission is a normal, negotiated part of the commercial terms of a fixture, and understanding it (and how it differs from broker's commission) matters when calculating the net freight or hire an owner actually receives. It is a small but standard element of chartering economics that affects the true earnings of a voyage or charter.
The gross freight on a fixture isn't what the owner pockets — address commission (a charterer's rebate) and brokerage come off first. Knowing the difference between the two, and how they reduce gross to net, is essential to calculating what a charter actually earns. It is a small but standard piece of chartering arithmetic.
How is address commission different from brokerage?
Brokerage pays the shipbroker for arranging the deal; address commission is deducted for the charterer's own benefit, effectively a rebate.
What is address commission deducted from?
From the freight, hire or deadfreight, as a percentage agreed in the charter party, reducing the owner's net earnings.