Pricing & Surcharges
Contract Rate
A freight rate agreed between shipper and carrier for a defined period and volume, giving price stability and usually a space commitment.
In depth
Contract rates trade flexibility for certainty. In exchange for committing volume over a period — often a year on the major lanes — the shipper receives a fixed or formula-based rate and, importantly, an allocation of space. That allocation is what matters most in a tight market, when spot cargo is being rolled and contract cargo still loads. The risk runs the other way in a falling market, where a shipper can be locked above the spot price. Contracts also normally specify which surcharges are included and which float.
Key points
- Fixed or formula rate for a defined period and volume
- Usually includes a space allocation, which matters most in tight markets
- Exposes the shipper if the spot market falls below contract level
- Check which surcharges are included and which float