Freight Glossary
Contract Rate – Meaning & Examples
A negotiated freight rate fixed for a defined period, typically 6-12 months.
- Related terms
- negotiated rate, annual rate, fixed rate
A contract rate is a freight rate negotiated between shipper and carrier/forwarder for a specific period (usually 6-12 months) and volume commitment. Contract rates provide price stability and guaranteed capacity, protecting shippers from market volatility. In exchange, shippers commit to minimum volume. During market ups and downs, contract rates may be higher or lower than spot rates. Service contracts (ocean) and BSAs (air) formalize these agreements.
Contract Rate examples
- A shipper's annual contract rate of $2,500 per 40' provides stability versus volatile spot rates.
How Contract Rate is used in freight operations
Contract Rate appears in quotations, bookings, shipping documents, and tracking updates. Confirm how it applies to your shipment with your carrier, forwarder, or customs representative, because practice can differ by country and contract.
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Frequently asked questions
What is Contract Rate?
A negotiated freight rate fixed for a defined period, typically 6-12 months.
What is an example of Contract Rate?
A shipper's annual contract rate of $2,500 per 40' provides stability versus volatile spot rates.