In the world of logistics, a freight agreement – also sometimes called a shipping contract or logistics service agreement – is the formal arrangement that defines how goods are carried from one place to another. It’s the foundation for transparency, accountability, and compliance between parties involved in transporting freight.

Defining the Freight Agreement

A freight agreement is a legally binding document between a shipper – typically the party sending the goods – and a carrier or logistics provider. It outlines:

• Scope and responsibilities –  which parties are involved, what transport modes are used (road, sea, air), and who handles specific services.
• Pricing and terms  –  the agreed freight rates, any surcharges, payment schedules, and cost-related details.
• Liability and insurance  –  how responsibility is shared in case of damage, loss, or delay, and how claims are handled.
• Performance expectations  –  delivery timelines, service levels, penalties or remedies for non-performance.
• Documentation and compliance  –  required paperwork such as bills of lading, customs documents, and declarations.

What Does a Freight Agreement Include?

Key sections in a standard freight agreement typically include:

• Parties and contract scope
  Clearly identifies the shipper and carrier, and whether the agreement covers a single carriage mode or multiple.
• Freight terms and pricing
  Defines the cost structure, including surcharges, currency, invoicing arrangements, and accepted payment terms.
• Liability and insurance provisions
  Describes the limits of liability, insurance requirements, and the process for filing claims.
• Delivery and performance standards
  Sets expectations for delivery windows, handling, transit tracking, and processes for exceptions or escalation.
• Documentation and compliance obligations
  States the key documents needed – like bills of lading, airway bills, licenses, customs declarations – and compliance with legal and regulatory frameworks.
• Contract duration and termination
  Clarifies if the agreement is for individual shipments or ongoing services, renewal terms, and exit provisions.
• Legal and governing terms
  Covers applicable law, dispute resolution, force majeure, and jurisdiction.

Why Freight Agreements Matter

Freight agreements are vital for several reasons:

• Clarity and reduced risk
  Outlining roles, costs, and liabilities protects both parties and reduces the potential for disputes.
• Efficiency and operational alignment
  When obligations and expectations are clear, logistics operations can proceed smoothly with predictable outcomes.
• Accountability
  Defined performance metrics and liabilities provide a basis for quality monitoring and claims.
• Legal certainty
  A contract provides a formal framework for enforcement and dispute resolution under agreed legal terms.

Key Legal and Contractual Considerations

International freight agreements often reference Incoterms – standardised trade terms created by the International Chamber of Commerce (ICC) that define cost and risk transfer between buyer and seller.

• FOB (Free On Board) – used in sea transport, the seller is responsible until goods are loaded at port; the buyer takes over from that point.
• Other terms like CIF (Cost, Insurance, and Freight) or FAS (Free Alongside Ship) define different responsibilities for shipping, insurance, and delivery points   

For maritime contracts, international conventions such as the Rotterdam Rules are sometimes applied to govern carrier and shipper obligations for door-to-door sea carriage – though these are not yet widely enforced.

Standard trading terms (like those from FIATA) often underpin freight agreements, forming part of the fine print known as Standard Trading Conditions (STC) found on transport documents such as bills of lading.

Documentation: Bill of Lading

One of the most essential documents in freight agreements is the bill of lading (B/L). It serves three critical roles:

1. Receipt – acknowledges the carrier has received the goods for shipment.
2. Contract evidence – demonstrates the terms agreed in the freight arrangement.
3. Document of title – authorises transfer of ownership to the holder of the document

To Summarise…

A freight agreement or shipping contract is the legal anchor of transportation operations, detailing:

• Who is doing what (roles and responsibilities)
• How and what is paid (terms, rates, surcharges)
• Who bears what risk (liabilities, insurance, claims)
• What counts as "good enough" performance (timelines, service levels)
• What documents are needed and what rules apply (incoterms, conventions, STCs)

In defining these elements clearly, both shippers and carriers ensure smoother operations, stronger accountability, and risk alignment – making the freight agreement a key enabler of efficient logistics.