Contract Carrier Example

July 8, 2022 Chase Flashman

Do you ever find yourself asking what is a contract carrier? We thought so. A contract carrier is defined as a “business that works with a select group of shippers to move people or goods between locations serviced by the contract carrier.” We see this primarily with parcel shipping companies who have specific contracts of carriage with their shippers. These contracts typically are negotiated once every three years and vary drastically from customer to customer. So, how do you know you have a good deal? Research is a good start but working with a company that specializes in carrier contract negotiation who makes all their decisions based on live market data is better. But, we’ll get to that later.

Contract Carrier vs Common Carrier

A common carrier is a “business enterprise that transports good and people from one location to another.” These include trucking firms, shipping firms, airlines, bus lines, and rail services. A contract carrier by contrast is a trucking or shipping company that serves specific companies. Contract carriers also offer specialized services including delivering medical supplies and transporting gases. These specialized services require expert handlers. Both common and contract carriers are strictly regulated and must obey the rules that control their operations.


Is FedEx a Contract Carrier?

The short answer is yes. FedEx establishes agreements with shippers that details the kinds of shipments they will accept, where they will deliver, and the base fees associated with each package. They are the definition of a contract carrier, while also being a common carrier.

Other Contract Carrier Examples

Another contract carrier example is UPS. UPS holds operating authority as a motor common carrier, a motor contract carrier and as a motor transportation broker. Other contract carrier companies include DHL, U.S Xpress Enterprises, and XPO Logistics.

What is Contract Carrier Authority?

Getting your operating authority is necessary to provide carrier contract services. Authority is permission for the Federal Motor Carrier Safety Administration (FMCSA) to be able to haul freight from one state to another. Gaining authority means you are complying with the requirements set by the FMCSA.

Contract carriers provide for-hire truck transportation to specific, individual shippers based on contracts. Contract carriers must file for liability and cargo insurance. Most insurance today requires a minimum of $1,000,000 liability and $100,000 cargo. However, the number varies greatly dependent on the type of goods being transported.

Negotiate with your Contract Carrier For Better Savings

Carrier Contract Negotiation can be overwhelming, but there is a solution. Working with a company that specializes in carrier contract negotiation who makes all their decisions based on live market data. At ShipSigma we know when to ask, what to ask for, and how to ask for it. We use ai-powered technology to show you how much we can save you before we negotiate your new rates. We’re not here to disrupt your operations or negatively affect your relationship with your carrier. Our mission is simple, we’re here to save you money. Our customers see an average of 25.2% savings. It only takes a minute to get started. Contact us today to learn about what savings you could see with our carrier contract negotiation solution.

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