The Importance of a Freight Contract

freight contract

A freight contract puts the agreement between a broker and carrier for freight hauling in writing. This ensures both parties know the financial arrangements, and makes it easier to build strategic relationships with carriers based on mutually beneficial terms.

Dedicated contracts are a way to secure committed pricing for the entire year, which makes budgeting and planning easier. They require a thorough assessment of transportation volumes and desired destination markets to identify optimal rates. It’s also important to consider capacity trends in your trade lanes. When demand exceeds capacity, spot prices are volatile and can change within a matter of days.

Understanding Freight Contracts: Key Considerations and Best Practices

On the other hand, when demand is lower and capacity is high, you may be able to find better spot rates. This is especially true during off-peak periods in transportation, such as between March and April.

Ultimately, you can increase your chances of winning future freight contracts by cultivating a strong network and attending trade shows or conferences where you can meet shippers in person. You can also partner with a third-party logistics (3PL) provider that manages freight contracts, so you can focus on finding quality carriers and growing your business. Centralizing a database of contract documents, such as BOLs, load tenders and accessorial contracts, helps you track trends, errors and critical variables that are out-of-tolerance to avoid expensive mistakes or lost opportunities. It also enables you to quickly compare your negotiated rate with the actual amounts on a BOL, which provides leverage for re-working contracts or negotiating with vendors.

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