What is Dead Freight?

Dead Freight is a logistics term used to describe the financial loss incurred when a shipper books and pays for a specific amount of cargo capacity, but fails to utilize all of it. In simple terms, it is the cost of shipping empty air.

This happens frequently in FCL (Full Container Load) ocean shipping and FTL (Full Truckload) domestic shipping. When you book a 40-foot ocean container, the shipping line charges you a flat rate for the box (e.g., $5,500). They do not care if you put 1,000 laptops in it, or a single pair of socks.

The Hidden Increase in Unit Economics

Dead freight destroys product margins through the "Effective Rate" metric. If a container holds 67 Cubic Meters (CBM), and you pay $5,500, your Base Rate is $82 per CBM. You base your product pricing on this.

However, if your supplier poorly loads the container and only fits 42 CBM of goods inside, your Effective Rate jumps to $130 per CBM. Your freight cost just skyrocketed by 58% per unit, instantly wiping out your profit margin without the carrier ever raising their prices.

How to Prevent Dead Freight

• Consolidation (LCL / LTL): If you do not have enough cargo to fill a container, do not book one. Use Less-than-Container-Load (LCL) shipping, where you share a container with other companies and only pay for the exact space you use.
• Carton Optimization: If your product boxes are slightly too large, they won't stack efficiently on a pallet, leaving massive gaps at the ceiling of the container. Shaving 1 inch off a cardboard box design can sometimes allow an extra 500 units to fit in a container.
• Supplier Penalties: If you order enough product to fill a 40ft container, but the supplier fails to manufacture it all in time and ships a half-empty container anyway, you should charge the supplier a chargeback for the dead freight loss.