Shippers want the certainty of their products reaching customers on time and at a fair price. Locking in transportation a contract gives shippers clarity on their delivery method.
Complications in the supply chain make certainty a more valuable asset than ever. We’ll explore how shippers can lock in transportation contracts to ensure customers receive their freight.
What Is a Transportation Contract?
A transportation contract lays out the ground rules between a shipper and a carrier. Both parties agree to expectations, payment terms, and other details. These contracts contain clauses that determine how a party can opt-out of the agreement or make adjustments. Shippers and carriers know the rules and agree upon them before getting started.
How Do Transportation Contracts Work?
Transportation contracts help prevent shippers from overpaying and carriers from getting underpaid. They establish payment details and term limits. Both parties can revisit an agreement as it approaches expiration.
2 Types of Transportation Contracts
Transportation contracts free you from price volatilities and cultivate relationships with carriers. However, you can only maintain so many contracts.
You may miss out on lower prices in the future and relationships with other carriers. Transportation contracts have their pros and cons. If you want to enter this space, you can select from two types of transportation contracts.
Dedicated Contracts
Dedicated contracts apply to specific types of freight. You may only want a particular carrier to assist with hazardous materials instead of letting them transport all of your cargo. Dedicated contracts also give the carrier priority. A shipper will reach out to their dedicated carrier and only explore alternatives if the dedicated carrier can’t fulfill the order.
Rate Confirmation Contracts
Rate confirmation contracts are one-off agreements that expire after an order gets delivered. These contracts identify payment terms, cargo, and other details. You can work with a carrier and extend the relationship, but you have no obligation under a rate confirmation contract. Shippers use this contract to “try out” a carrier and determine trustworthiness.
8 Steps for How To Get Transportation Contracts
Transportation contracts help you establish relationships with carriers and deliver freight to customers. These steps will expand your choices, so you work with the best carriers for your objectives.
Step 1: Contact Shippers
Freight brokers and fellow shippers can provide excellent client recommendations. You’ll receive several suggestions, which you can research and contact individually. Expanding your pool of potential clients can help you negotiate competitive rates and find the best fit for your company.
Step 2: Hire a Dispatcher for Owner Operators
Some business owners prefer to delegate the work instead of doing it themselves. Delegation gives them more time to focus on other objectives. Shippers aiming for delegation should seek a dispatcher for owner operators.
Dispatchers can get transportation contracts on your behalf. They help you find carriers and build relationships with them. Some dispatchers know the best carriers before you hire them, helping you save more time.
Step 3: Use Load Boards
Load boards are online platforms that connect shippers and carriers. You can browse through several carriers and reach out about transportation contracts. Carriers use these platforms to keep their trucks full, and many will work with several clients. You can start with a rate confirmation contract and inquire about a dedicated contract if you enjoy working with the carrier.
Step 4: Don’t Rely Solely on Load Boards
Load boards have their perks, but you shouldn’t rely on them. Not every carrier will build relationships that extend beyond rate confirmation contracts. Carriers may also talk with several shippers at once and not develop deeper relationships with shippers. Use other tools and resources to obtain contracts to diversify your efforts.
Step 5: Know Your Target Clients
Some clients are better to work with than others. Certain carriers provide more favorable rates or can reliably deliver your freight to desired locations.
Create a client avatar, so you know what to look for in a carrier. Some companies prefer to work with LTL trucking companies instead of FTL. As your company expands, you can focus your efforts on top clients instead of whoever will agree to a transportation contract.
Step 6: Connect With Registered Government Contractors
Registered government contractors team up with truckers and carriers to distribute freight. These contractors work with many clients and know the best carriers.
You can build relationships with these contractors and ask for recommendations. Carriers working with the government understand long-term relationships. You can reach out to these companies and propose a transportation contract.
Step 7: Create Networks
It’s not just about who you know, but also about who knows you. Creating networks leads to more introductions and stronger relationships. Talking with people in transportation can lead to word-of-mouth recommendations and potential clients.
Step 8: Join Industry Groups and Associations
Industry groups and associations help you connect with fellow shippers and carriers. These connections can lead to new relationships. These groups can introduce you to new clients:
- Joint Trucking Associations: You can interact with several drivers and carriers from these associations. The National Association of Independent Truckers and American Trucking Associations are great places to start.
- Become a Member of Industry Groups: Spend time in groups filled with shippers to get additional referrals. New colleagues open doors to new opportunities.
Load Up on Transportation Contracts
Transportation contracts provide clarity for shippers and carriers. Shippers can establish long-term relationships and know how much they’ll pay for delivery. These certainties help shippers focus on expanding operations so they can ship more freight in the future.
FAQ
Truckers get clients through various tactics and platforms such as load boards, networking, and associations.
Trucking companies get contracts by building relationships with suppliers. These companies may start with rate confirmation contracts to build trust before switching to dedicated contracts.
Shippers use load boards to find carriers. However, you shouldn’t rely on load boards due to their competitive nature.