Freight agency contracts are the legal guarantees behind many long-term partnerships between freight carriers and their customers. It is important to know what to include and what to expect in such a contract. This post is your guide which let you know everything.
For example, suppose you are ready to ship cargo regularly from Dalian, China to Antwerp, Belgium. There are a few things to keep in mind to ensure safe transportation each time. You need to load the container. Book a slot on the ship. Customs declaration is required. You also need to create and issue relevant documents, pay and settle fares, and more.
You cannot be anywhere at the same time. Therefore, freight carriers use agency contracts. In this way, they and you can get help throughout this process. Coordinating every step of a container journey can be time consuming as well as draining. With the freight agency contract, they are on track to save time and improve efficiency.
And talking about the complex process behind all container movements, if you’re already having a headache, you can take service of third party to digitize container logistics. It’s automatic, so you don’t have to manually track every container. You also don’t have to receive a call or send another email to check the status and ETA of your container. And if you need a container, you can quickly find the box available from a trusted partner.
What is a Freight Forwarding Agency Contract?
Freight agency contracts are long-term, complex contracts. This is usually signed between two freight carriers, or other companies that hold freight carriers responsible for freight services.
In these partnerships, the freight contract is to reflect all previous negotiations.
A freight agency contract is a type of legal document that sets clear terms on what happens if something goes wrong during the arrangement, service, payment, and import / export process. This should be an important document explaining the nature of future partnerships. All other transactions are carried out under the terms of the freight carrier and its clients as set forth in the agency contract.
Without this type of agreement, companies would have to rely solely on national and international laws, regulations, and treaties.
Note 1: There is no one type of freight agency contract that fits all scenarios. Everything is different, depending on the business you are targeting. The agreement between the two freight carriers, and the services they provide to each other, is different from what freight carriers and brokers provide.
Note 2: The freight carrier independently agrees to the basic terms, but legal professionals need to draft the final text and give advice on the prescription.
Benefits of signing a contract
As mentioned earlier, there are already international regulations that protect freight carriers. However, freight agency contracts provide additional legal support in the event of a dispute between contractors.
You can use the contract because it includes all possible business and routing steps.
- During a legal dispute
- In any case, or a claim submitted by the client
- Depends on the payment collection agency.
What to include in the freight agency contract
They have already established that there is more than one sample contract text that you can copy and paste into a Word document. However, some important points are common to all of them.
The documentation should include:
Clear definition, name, date
You need to have a clear understanding of all the terms used in the contract. Who are the parties? What does freight transportation service mean?
This document should include the company’s name, registration, address, correct date, and the name of the person in charge.
This is a very important part. This is because it details the services that companies provide to each other. The decision is to reflect the scope of the contract. For example, does this contract cover both LCL and FCL sea freight transport? Are some services subcontracted?
The nature of the goods handled under the contract must be clearly stated in the document. They guarantee that it will be processed correctly. It is important to clarify whether the cargo consists of:
Dangerous goods and dangerous goods
Fresh food including refrigerated products
High-value products such as bullions, banknotes, and jewelry
Personal / household items
Obligations to the parties
These are the obvious points. The contract should clarify the obligations and responsibilities assigned to each party. This is usually the largest part of the contract.
For example, these obligations to Party A are to specify who will issue documents such as powers of attorney and when. As well as the details of the content of the document. This letter usually consists of all the important points needed before shipping. Port loading, destination port, number of packages, total weight, quantity, price terms, shipping date, calculation, payment method, etc.
Party B, on the other hand, may be obliged to provide a shipping time schedule and reserve shipping space with the carrier or its agent for a certain number of days (specified in the contract). It is necessary to arrange bills of lading, etc.
Settlement of fees
Another important part of a successful partnership is processing payments on time. Therefore, most forwarding contracts contain information about this. This must include the date on which the parties must settle all outstanding invoices or fees, as well as agency fees.
It’s also a good idea to explain which parties pay the bank charges and what payment methods are acceptable.
Responsibility for contract breach
In the event of an unexpected event, the parties must have clear basic rules. And that is a point common to all legal agreements. If a party fails to live up to expectations for some reason, they know how to deal with it.
In this part of the contract, the parties need to clarify and agree on what will happen if the contract is breached. Would you like to renegotiate? Does anyone have to pay a fine? Will the agency be involved in the resolution process? All of these questions need to be addressed in this document.
Validity, fix, and end
You must also include a clear date when the contract takes effect or loses legal authority. Similarly, how to make a correction.
Digitize container logistics using third party service provider
You have now drafted a freight agency contract. It covers all services and responsibilities. You are confident and legally bound by your partner. How long did it take to reach the signing stage? Probably more than you wanted.
And that’s the truth. A successful freight business requires a great deal of effort and effort. Endless paperwork, mass email and phone calls have always been a drag on the logistics industry. Small, time-consuming tasks can keep you away from more important issues.
But you don’t have to be a human octopus. Many parts of the business can be easily automated. You don’t have to spend hours finding containers where you need them right now. They also do not conduct a thorough background check. Or, there’s yet another long contract negotiation, but this time with the container owner.
What if you could find containers all over the world on one online platform? Did the platform, where everyone went through background checks and standard contracts, make it easier to negotiate daily allowances and pick-up locations?
To make it even better, imagine if your partner can go online and get the status of the container without asking you. You will also be notified whenever a container event occurs. It’s easy and convenient, isn’t it?