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22 Jun 2016

Gap Between Contracts Can Cost

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Let’s say you have had a long-standing contract involving many carriers for a through rate. One of the carriers has informed you that they are no longer able to be a part of that through rate. As such, your product and marketing managers must begin to negotiate new rates for that carrier’s portion of a route. When the negotiations conclude, the original contract must also be re-written with the new route and rates. These activities are time consuming, and often while negotiations are still underway, the original contract expires.

In this “gap” between the end of an old contract and the beginning of a new one, carriers must continue to invoice shippers and shippers must continue to pay their freight. As a result of the “gap”, many different scenarios that are not beneficial to shippers may ensue. Invoicing will default to Rule-11 tariff rates.  If a point-to-point tariff rate is not available, a high-mileage scale might apply.

If a tariff rate does not exist, the carrier may update it to include one or provide a one-time quote or spot quote temporarily. Customers might even negotiate a temporary rate of their own to be billed collect. Such a “gap” may last a few days or a few months, but when the new contract is finally put in place, carriers will sometimes honor the new negotiated rates back to the date of original contract expiration.

These typically are complex situations to identify but not for the experts at AMTR. Let us review your freight to ensure you never pay more than what was intended.

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