Key Takeaways

  • A shipping contract defines the rights, responsibilities, and liabilities of shippers, carriers, and consignees during transportation.
  • The agreement should cover essential terms such as delivery timelines, freight charges, insurance, liability, and dispute resolution.
  • There are two main types of contracts: shipment contracts (risk transfers when goods are shipped) and destination contracts (risk transfers upon delivery).
  • Negotiating a shipping contract involves evaluating carrier costs, delivery performance, and total logistics expenses.
  • Written agreements reduce misunderstandings and protect both parties in case of damage, delay, or loss.
  • Government and international shipping arrangements may involve additional regulations and compliance obligations.

Shipping contracts are documents that will clearly define a legal relationship between a client and their shipper. 

What Is an Ideal Shipper or Trucking Client?

When you own and operate a small business, there are several important issues that you must consider, including what constitutes your perfect client. For example, accepting every client that visits your business isn't a good idea, possibly interfering with your goal of long-term success. The better idea is to be very selective when picking your clients.

When looking for shipper or trucking clients you should keep these issues in mind:

  • The business the client will bring to your company.
  • How well they pay and how quickly.
  • How easy they are to work with.
  • If they value quality service and not just low prices.

While it may be impossible to find clients that fulfill every item on this list, you should be able to find people that meet the majority of your criteria if you are diligent. 

Load Boards

One of the best ways to find work for your shipping or trucking company is working with load boards.

There is a great deal of competition for quality loads, as well as popular trucking routes, which can force you to price your service lower than you would like. Because you can only transport one load at a time, you will have to make frequent visits to the load board to find your next job. While load boards can be an invaluable resource for people just entering the trucking business, they aren't an effective way of finding long-term clients.

If you want your trucking company to succeed, you should invest in marketing materials such as merchandise with your company's phone number and logo. Distributing these materials will make it easy for potential clients to find your company. 

How to Find Regular Trucking Clients

The best way to find trucking clients that will regularly give you loads is to directly contact shippers, either by phone or email. This method of securing clients is both effective and affordable. Unless you can be sure of a return on your investment, you shouldn't break the bank on advertising. Most ads, particularly those in magazines, are easy to ignore and typically won't bring new business to your trucking company.

Consider Working with the Government

Many people are surprised to learn that the United States government is the country's biggest shippers. In many cases, the government will outsource their shipping needs to small companies, providing you with a great opportunity to grow your business. The Postal Service, for example, commonly uses contractors to ship their freight. To find shipping jobs offered by the US government, you can visit FedBizOps. 

Shipping Agreement Basics

Whether you're a company offering shipping services, or you need to find someone to help you ship your own goods, it's always a good idea to use a shipping agreement or shipping contract. These agreements can outline the relationship between a shipper and the client who needs goods shipped.

You should use a shipping agreement if:

  • You need to hire someone to ship your products. 
  • You are a shipping company.

Key Elements of a Shipping Contract

A strong shipping contract should specify all the terms that govern the movement of goods, clearly defining each party’s obligations to avoid disputes. Essential elements include:

  • Parties Involved: The shipper (sender), carrier (transporter), and consignee (receiver).
  • Description of Goods: Type, quantity, and packaging details of the cargo being shipped.
  • Delivery Terms: Origin and destination points, expected delivery date, and whether it is a shipment or destination contract.
  • Freight Charges and Payment Terms: The total shipping cost, how it’s calculated, and payment deadlines.
  • Liability and Risk Transfer: Clarifies when the responsibility for loss or damage shifts from the shipper to the carrier or consignee.
  • Insurance Requirements: Specifies whether the shipment is insured and which party bears responsibility for coverage.
  • Customs and Regulatory Compliance: Outlines who handles documentation and ensures compliance with international or government shipping regulations.
  • Dispute Resolution: Establishes mechanisms such as mediation, arbitration, or jurisdiction for handling contract breaches.

Including these terms ensures that both domestic and international shipping operations run smoothly and that potential risks are mitigated.

Types of Shipping Contracts

Shipping agreements generally fall into two categories, each defining when ownership and risk transfer occur:

  1. Shipment Contracts:
    • Risk transfers from the seller to the buyer once the carrier takes possession of the goods.
    • The seller is only responsible for delivering the goods to the carrier.
    • Common under FOB (Free on Board) Shipping Point terms.
  2. Destination Contracts:
    • Risk remains with the seller until the goods reach the specified destination and are delivered to the buyer.
    • Often used for higher-value shipments or where the buyer wants assurance of safe delivery.
    • Common under FOB Destination terms.

Understanding which type applies is essential to determine liability for damages during transit.

Shipping Contracts and Negotiating Deals

The most common reason for a company to renegotiate their shipping contract is they want more beneficial terms that are being offered to other companies. So, during negotiations, it's common for the client attempting to renegotiate their contract to use the contracts of other companies as a benchmark. The main goal of re-negotiation is typically getting lower shipping prices.

One of the most underused approaches when renegotiating shipping contracts is comparing a company's shipping needs with the costs the carrier must cover to meet those needs. For example, with a Cost Model Approach, the company attempting to renegotiate their contract may be able to save a great deal of money.

The goal of contract negotiations should be making sure that both parties are benefiting from the contract. To accomplish this goal, using “total package” analysis is a good option. This method of model analysis considers factors such as a company's shipping needs, the typical costs of the carrier, and the current language of the agreement to determine if there is a way to renegotiate the contract that would be amenable to both sides.

Common Clauses in a Shipping Contract

When drafting or reviewing a shipping contract, it’s important to identify and negotiate key clauses that impact operational efficiency and cost. Some of the most significant include:

  • Force Majeure Clause: Protects parties from liability due to unforeseeable events such as natural disasters or political unrest.
  • Indemnification Clause: Specifies how losses or damages will be compensated between the shipper and carrier.
  • Performance Standards: Sets expectations for delivery timelines, service quality, and communication protocols.
  • Termination Clause: Defines conditions under which either party may end the agreement.
  • Audit and Data Reporting: Allows shippers to verify billing accuracy and carrier performance metrics.

Clear, well-structured clauses prevent costly disputes and provide flexibility for evolving logistics needs.

International and Government Shipping Contracts

International and government shipping arrangements often have stricter requirements due to security, compliance, and legal factors. For example:

  • International Shipping Contracts: Must comply with international conventions such as the Hague-Visby Rules, Carmack Amendment, or Incoterms, depending on where the goods are shipped.
  • Government Shipping Contracts: In the U.S., agencies may require carriers to meet specific security and reporting standards. Contractors must register in databases such as SAM.gov and follow procurement rules.
  • Customs and Tariffs: Parties must address import/export documentation, duties, and customs inspection responsibilities.

Working with an attorney familiar with international trade and shipping law can help ensure compliance and minimize risk.

Frequently Asked Questions

1. What is a shipping contract?

A shipping contract is a legally binding agreement that outlines the terms for transporting goods, including delivery obligations, risk transfer, and payment details.

2. What’s the difference between a shipment and destination contract?

A shipment contract transfers risk to the buyer once goods are handed to the carrier, while a destination contract transfers risk only after delivery.

3. Who is responsible if goods are damaged in transit?

Responsibility depends on the contract type and terms. Generally, risk passes to the buyer under shipment contracts when goods are shipped and under destination contracts upon delivery.

4. What should a shipping contract include?

It should cover parties involved, delivery terms, payment conditions, liability, insurance, and dispute resolution mechanisms.

5. Do I need a lawyer to draft a shipping contract?

Yes, it’s advisable to consult an attorney to ensure your shipping contract complies with applicable laws and protects your business interests. You can find experienced attorneys on UpCounsel to assist with drafting or reviewing your agreement.

If you need help understanding or writing shipping contracts, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.