Contract Rate
A pre-negotiated freight rate between a shipper and carrier for a set period.
Definition
A contract rate is a freight rate agreed upon between a shipper and carrier for a specified time period, typically 6-12 months. Contract rates provide stability and predictability for both parties, unlike spot rates which fluctuate daily. Contract rates are generally lower than spot rates during tight capacity but higher during soft markets. Large carriers derive 70-80% of revenue from contract freight.
FAQ
What does Contract Rate mean?
A pre-negotiated freight rate between a shipper and carrier for a set period.
Why is Contract Rate important for truck drivers?
Understanding contract rate is essential for truck drivers because it directly impacts your daily operations, pay, or compliance. A contract rate is a freight rate agreed upon between a shipper and carrier for a specified time period, typically 6-12 months. Contract rates provide stability and predictability for both parties, unlike spot rates which fluctuate daily.