Virtually every business has a relationship with a transportation company, which should be documented in a formal contract called a transportation contract. These legally binding documents highlight the array of services the transportation company provides you including, local rail drayage services, motor carriers, freight forwarding, and others.
The transportation contract is designed to document all of the critical details of a transportation service agreement, including delivery times, shipping method, obligations of both parties, costs, and fees. The transportation contract is legally enforceable and can be created for a vast range of transportation services.
At TransAudit, we offer an array of services including transportation contract management where we conduct audits to find savings and ensure you’re not paying more than you should. Let’s take a closer look at some of the most common areas of interest in transportation contract management and contract compliance.
Transportation Contract Management
Although your transportation contract can vary substantially, they typically include certain items. Most of those items are mentioned below.
One of the most important areas of concern for transportation contract management and contract compliance is billing payment. Your transportation contract should provide very detailed information about payment and billing. This should include:
- Collection costs
- Late payment penalties
- Payment due dates
- Legal Fees
Most transportation contracts include a waiver of consequential damages. These damages may include loss of profit as well as other kinds of indirect loss. The consequential damages may also include the ceasing of the manufacturing process that may be remotely related to your services.
Your transportation contract may feature a safety clause. The safety clause should explain that the entity or individual who performs the task will be responsible for job safety.
The liability limitation clause will explain the maximum amount of liability the carrier will be exposed to in the event a claim arises from them providing services to your business.
Scope of Services
Your transportation contract should include a clause that describes each of the services the provider will offer you. It should explain standard services as well as the services that will come with additional charges. This detailed list of services can be instrumental in preventing future controversies.
Dispute Resolution Clause
The transportation contract should include a section on dispute resolution. While it’s an informal approach, mediation has proven to be a highly-effective route, especially when used early on in a dispute.
Standard of Care
The standard of care the carrier will provide you should be defined affirmatively. And this standard of care should be high enough to meet your expectations.
If a contract never expires, it can quickly become problematic. Because of this, most transportation contracts will have a clause that explains the circumstances where the relationship can be terminated. The most ideal solution is to have renewals set at particular intervals.
Types of Transportation Contracts
For the most part, freight contracts are designed to dictate the responsibilities between freight carriers, brokers, and shippers as well as shippers. Some of the most common types of contracts include:
- Load tenders are highly-detailed agreements about the consignee scheduled to receive the freight. Tenders include weight, descriptions of freight, pertinent contact information, and measurements.
- Broker-carrier agreements are contracts that are signed once the freight rate is agreed upon. These types of contracts include a range of data, such as invoicing procedure, agreement dates, pay dates, insurance, or liability information.
- Bill of Lading is actually less of a contract and more like a receipt. In either case, the Bill of Lading signifies the delivery of freight. This document is legally binding once it has been signed.
- Accessorial contracts are designed to highlight any wait time fees, handling charges, detention fees, refueling costs, and any other charges that may arise moving the freight. These contracts are instrumental in acknowledging different accessorial costs and assigning protocols for them.
All of these documents are critical for businesses, carriers, and brokers.
Why Is Transportation Contract Management & Contract Compliance Important?
When it comes to contract compliance, it’s important you are receiving the services you have paid for. And the only way to ensure this is the case is with strategic transportation contract management. At TransAudit, we offer strategic contract compliance and transportation contract management services to verify the accuracy of billing. Without verification, billing errors can be extensive and rampant, costing your organization substantial money over the life of your relationship with a carrier.
The TransAudit Contract Compliance Process
Our Contract Compliance process is engineered to ensure the accuracy of expense generating agreements and their resultant billing transactions via:
- Preliminary analysis of previous expenses to identify primary suppliers and expense categories with the highest capacity for cost reduction and recovery.
- We will collect and review the contract terms and conditions for suppliers you select
- Collect and review invoices and sub-invoice data and records for selected suppliers
- Provide detailed analysis line-by-line and carefully review of payment records, invoices, purchase orders, and additional documentation
- Confirm industry standards and contract provisions are accurately applied to your billing
- Identify, substantiate, and submit overcharge claims to suppliers
- Identify opportunities to reduce cost and improve contracts
- Negotiate directly with carriers and settle claims of overcharge
- Seek out cash refunds of overpayments and ensure the credits reflect your full entitlement.
In the end, we’ll use our proven process to ensure you’re being billed accurately. And if you’re not being accurately billed, we’ll work directly with the supplier for cash refunds and credits.
Contact TransAudit for Transportation Contract Management
Today amid COVID-19, it’s more important than ever for logistics departments and businesses to find savings. And transportation contract management can open the door to the cost savings and strategic benefits your business needs.
Contact TransAudit today for transportation contract management and contract compliance services.