The business world wants everything in writing. They want it in "legalese" and they want the document to cover contingencies. As a third party, the law says that a contract needs to be in place between the carrier and his broker. There should also be a contract between a shipper client and his broker partner.
These documents outline who does what for whom and when. They provide the paper trail for responsibility through the life of a load. Contracts don't need to be in writing; they can be verbal but a verbal contract is hard to defend in court.
Written contracts need to:
- be bilateral in nature and address issues for both signing parties;
- cover a series of shipments that imply a relationship between the signing parties;
- show specific need, which implies that one party needs the other because of specific things that they bring to the relationship;
- be signed by an officer of each corporation. Electronic signatures can be scanned and used where appropriate.
These contracts should also have a generic pricing mechanism to calculate pricing on transactions that are out of the ordinary. For instance, "The freight rate for freight all kinds between all points is $1.30 per mile. All exceptions to this rate will be in writing in the form of an addendum, which will be numbered and filed."
A contract addendum should:
- be signed for each special shipment;
- contain all information and instructions to the carrier pertaining to the shipment;
- include all pricing for the transaction;
- be signed and returned by electronic means or faxed before the shipment is tendered;
- be signed by an authorized party.
Contracts are as complicated as the relationship is between the parties. Simpler is better. Addressing dispute resolution is important. Having the "venue" in your own county means that legal proceedings will occur there in the event of a lawsuit. Longevity, and conditions for breaking the contract, can also be addressed.
The rate schedules should be easy to understand and simple to use. For instance, a map of the United States showing how many cents per mile from a certain point to all states is easy. Often shippers like point-to-point rates. For example, from Chicago to Denver, the rate is $1600. That is a flat rate. Some clients want pricing by zip code; some prefer county rates. Others want freight pricing by the hour or by the ton. Regardless of how it's accomplished, rate schedules should be crafted in a simple manner and should include exceptions, minimum charges, fuel surcharges and access charges or charges for accessories.
There are many document-scanning programs on the market. Storing bills of lading, freight bills and all pertinent information relating to a transaction can be a challenge. Looking for a delivery signature can be time-consuming. If all documents are scanned, the system could be accessed from a website. Anyone authorized could find their document, download it and fax or e-mail it. Updated freight-tracking screens can also be accessed from a website. All this technology is commonplace and getting cheaper. Any software products that shrink the loop, or eliminate a step, will lower costs.
How many file cabinets are in your storage room? How would you like to eliminate them all? How much time does it take to look up a document and mail or fax it? Have you ever considered going paperless? Paperless organizations are more productive and the cost of technology needed to accomplish this is rapidly dropping. Set your goal: plan to be paperless in 12 months!
Rick Jones, CTB is President of Meadow Lark Companies, a freight brokerage in Billings, Montana.
Details: www.meadowlarkco.com
