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Did you know that in 2023, companies signed 34 shipping agreements worth ₹3.24 lakh crore at the Global Maritime India Summit?
Shipping goods without a proper agreement can lead to unexpected costs, delays, and even disputes. Have you ever wondered how businesses ensure smooth and hassle-free deliveries? The answer lies in a well-drafted shipping agreement.
A freight shipping contract sets clear terms between the sender and the carrier, ensuring both parties understand their responsibilities. But how do you create one? What shipping contract terms and conditions should you include?
If you’re looking for a shipping agreement template or wondering how to draft a shipping agreement that protects your business, you’re in the right place. In this guide, we’ll walk you through the essential steps to create a solid agreement that keeps your shipments secure and your business running smoothly. Let’s move in!
What is a Shipping Agreement?
A Shipping Agreement is a written contract between two parties: one that ships goods and another that receives them. This agreement sets clear rules on how the goods will be transported, who is responsible for damages, and what happens if there are delays. To put it simply:
- It’s a contract between a sender and a shipping company that lays out how goods will be delivered.
- It explains key terms like shipping costs, delivery timelines, and liability in case of loss or damage.
- It sets expectations for both parties, such as packaging requirements and insurance coverage.
- It includes rules on cancellations, penalties, and dispute resolution to prevent conflicts.
This agreement helps both you and the shipping company avoid confusion and ensures smooth deliveries.
When Do You Need a Shipping Agreement?
Now, let’s go through where a shipping agreement is commonly used. Whether you’re regularly sending goods or just shipping something once, having a clear agreement can keep things simple and hassle-free.
- For Business Shipments
- If you own a business that frequently ships products, this agreement makes sure there’s no confusion about delivery timelines and costs.
- Did you know? Around 95% of India’s trade happens through shipping.
- For Large Shipments (Freight Transport)
- When moving big or heavy goods, a freight shipping contract helps define costs and responsibilities so there are no surprises.
- Fact: The global freight forwarding market is growing at 4% every year.
- For International Shipping
- Sending goods to another country? This agreement ensures everything is handled properly, including customs and import duties.
- Fact: India has 12 major ports that manage international trade.
- For Third-Party Shipping Services (3PL)
- If you hire another company to handle your shipping, a contract makes sure they provide the service as promised.
- Fact: There are over 31,000 logistics companies offering 3PL services in the U.S. alone.
- For Expensive or Fragile Goods
- Shipping something valuable or breakable? A contract ensures safe handling and insurance coverage.
- Fact: Businesses that use proper shipping agreements can cut freight costs by up to 95%.
- For One-Time Large Shipments
- If you’re shipping something big as a one-time deal, this contract ensures there are no unexpected extra charges.
- Fact: The global freight industry is expected to reach $1.9 trillion by 2032.
In simple terms, if you’re shipping goods—whether it’s every day or just once—having a clear agreement helps avoid misunderstandings and keeps everything smooth.
Next, we can look into how to draft a shipping agreement. If it’s a freight shipping contract or an international shipping agreement, here is how to set it all up in a way that works for you. Let’s look!
1. Title of the Agreement
- Start with a clear title. You can call it “Shipping Agreement” or make it specific like “Freight Forwarding Agreement” or “Cargo Shipping Agreement”, depending on what you’re shipping.
2. Introduction and Purpose
- In this part, say what the agreement is for. For example, you might write: “This is an agreement between [Your Company Name] and [Carrier’s Name] to ship goods from [Location A] to [Location B].”
- If you’re working internationally, mention if it’s an international shipping agreement.
3. Parties Involved
- Identify everyone involved. Include names, addresses, and roles. This is where you mention who the shipper, consignee (receiver), and the carrier are. Don’t forget any third parties like freight forwarders.
- Example: “This logistics agreement template is made between [Your Company Name], [Carrier’s Name], and [Freight Forwarder’s Name].”
4. Scope of Services
- Describe the services the carrier will provide. This includes transport, loading, unloading, and any delivery steps. This is where you mention how long the goods will be shipped for and any related services.
- Example: “The freight shipping contract includes transporting goods from [Start Location] to [Destination], with delivery to [Receiver’s Name] on [Delivery Date].”
5. Shipping Details
- Talk about what’s being shipped, how much of it, and what kind of packaging it needs. Be clear so there are no surprises.
- Example: “The shipment includes [200 boxes of products], weighing a total of [5 tons], packed in [standard pallets].”
6. Payment Terms
- Clearly explain how much will be paid and when. If the shipment’s cost is, say, $500, make sure to note when the payment should be made.
- Example: “The shipper agrees to pay the carrier [Amount] for services rendered within [30 days]. Late payment will include a penalty of [Amount].”
7. Delivery Terms
- Include when the goods will be delivered, and what the timeline looks like. Be clear if there are any extra steps to take before the goods can be handed over.
- Example: “Delivery should be completed within [3 days] from pickup. If delays happen, the carrier will let the shipper know right away.”
8. Insurance and Risk of Loss
- This section tells you who’s responsible if something happens to the goods during shipping. Will you need insurance, and who will pay for it?
- Example: “The goods will be insured by the carrier during transit, covering damage or loss. The cost of insurance will be added to the shipping fees.”
9. Shipping Costs
- Mention all the shipping charges involved. If there are customs duties (for international shipments), taxes, or handling fees, make sure they’re all noted here.
- Example: “The shipper will pay a total of [Amount] for shipping, including taxes, handling, and any customs fees.”
10. Shipping Method and Mode of Transport
- Here, mention how the goods will get from one place to another. Will they be flown, driven, or shipped by sea? If it’s international, include the customs rules.
- Example: “The goods will be shipped via air freight, using a cargo shipping agreement to ensure quick and safe delivery.”
11. Responsibilities of the Parties
- This is about making sure both sides know what they’re supposed to do. Does the shipper pack the goods? Will the carrier make sure the delivery happens on time?
- Example: “The shipper is responsible for packing and labeling goods correctly. The carrier must deliver them on time and in good condition.”
12. Force Majeure Clause
- This is a safety net in case something unexpected happens, like a natural disaster or a strike. If things go wrong, this clause says it’s not anyone’s fault.
- Example: “Neither party will be responsible for delays caused by events beyond their control, like weather conditions, labor strikes, or government restrictions.”
13. Termination Clause
- Explain how the agreement can be ended. What happens if one side isn’t keeping up with their responsibilities? Can the agreement be canceled?
- Example: “Either party can cancel the agreement by giving a [30-day] notice. If there’s a breach of terms, the agreement may end immediately.”
14. Dispute Resolution
- This section is about how to handle any problems that come up. You can choose a method like mediation or arbitration to keep things simple.
- Example: “If any issues arise, they will be solved through mediation or arbitration, with the decision being final.”
15. Signature and Date
- Finally, include signature lines for everyone involved, as well as the date the agreement was signed.
- Example: “By signing below, both parties agree to the terms and conditions set forth in this shipping contract sample.”
If writing a shipping agreement from scratch seems too complicated, you can always use a shipping agreement template. Templates help save time and ensure you’re not missing any important details, especially when you’re new to shipping contracts. If it’s for a domestic deal or an international shipping agreement, these templates can make the process much easier.
What are the Consequences of Not Providing a Shipping agreement?
If you don’t have a shipping agreement in place, you’re setting yourself up for a lot of trouble. Let us look what could happen:
- Confused Roles: Without a clear agreement, both sides might get confused about their responsibilities. In fact, many businesses struggle with delays just because they didn’t set clear expectations upfront (62% to be exact).
- Shipping Delays: If you don’t agree on timelines and processes, shipments can get delayed. More than half of shipping companies report issues with missed deadlines because of unclear terms.
- Extra Costs: When you don’t specify the details, you might end up paying more for shipping than you planned. Nearly half of businesses face unexpected costs for this reason.
- Legal Problems: No shipping agreement means you risk running into legal trouble if things go wrong. About a third of supply chain issues come from not having a proper contract in place.
- Damaged Goods: If it’s unclear who’s responsible for damages, you’ll have to deal with the consequences. A lot of goods get damaged because the responsibility wasn’t clearly set in writing.
- Losing Reputation: When your shipments are late or damaged, customers notice. Around 72% of people say they won’t buy from a company again if they have a bad experience with shipping.
So, these are the common consequences of not having a shipping agreement in your business. It’s important to get a solid shipping agreement in place to avoid all of this.
Shipping Agreement FAQs
- How do I create a shipping agreement for small businesses?
Creating a shipping agreement for small businesses is simple. Start by outlining the basics: who’s involved, what’s being shipped, and where it’s going. Include details like costs, delivery timelines, and liability terms. You can use a free shipping agreement template PDF download to save time and ensure you don’t miss anything important.
- What should I include in a freight shipping contract?
A freight shipping contract should include:
- Names and contact details of the shipper and carrier.
- Description of the goods being shipped.
- Pickup and delivery locations.
- Shipping costs and payment terms.
- Liability and insurance details.
- Terms for delays or damages.
For a detailed example, check out a sample shipping agreement for e-commerce businesses.
- How do I draft a shipping agreement for perishable goods?
When drafting a shipping agreement for perishable goods, focus on:
- Special handling instructions (e.g., temperature control).
- Delivery timelines to ensure freshness.
- Liability clauses for spoilage or damage.
- Insurance requirements.
You can use a shipping agreement template for logistics companies to get started.
- What’s the difference between a shipping agreement and a freight forwarding agreement?
A shipping agreement is between the shipper and the carrier, while a freight forwarding agreement involves a middleman (the freight forwarder) who organizes the shipment. Freight forwarders handle logistics like customs clearance, making them essential for cross-border shipments.
- Where can I find a free shipping agreement template PDF download?
Many legal and business websites offer free templates. Look for one that matches your needs, whether it’s for international cargo transport or local deliveries. Make sure the template includes all necessary terms and conditions.
- What are the key shipping contract terms and conditions for carriers?
Key terms and conditions for carriers include:
- Delivery timelines and penalties for delays.
- Liability for lost or damaged goods.
- Payment terms and additional fees.
- Insurance requirements.
- Force majeure clauses for unexpected events.
These are especially important in a freight shipping contract.
- How do I write a shipping agreement for hazardous materials?
When writing a shipping agreement for hazardous materials, include:
- Detailed descriptions of the materials and their risks.
- Compliance with safety regulations (e.g., OSHA or IATA).
- Special handling and storage instructions.
- Emergency response plans in case of accidents.
This ensures safety and legal compliance.
- Can I use a shipping agreement template for air freight services?
Yes, you can use a shipping agreement template for air freight services. Just make sure to include air-specific details like:
- Airway bill numbers.
- Compliance with airline regulations.
- Special handling instructions for fragile or high-value items.
- What’s the best way to handle disputes in a shipping contract?
To handle disputes, include a dispute resolution clause in your shipping contract terms and conditions. Options include mediation, arbitration, or legal action. Clearly outline the process to avoid confusion later.
- How do I terminate a shipping agreement legally?
To terminate a shipping agreement legally, check the termination clause in your contract. It should outline:
- Notice periods (e.g., 30 days’ notice).
- Conditions for termination (e.g., breach of contract).
- Any penalties or fees for early termination.
Final Thoughts
Writing your shipping agreement is easier than you think. With Draaft, you can draft all documents in just a minute—quick and simple!
If you need a sample shipping agreement or just a basic template, Draaft has all the options you need. All you have to do is choose the template that works best for you, fill in your details, and you’re done!
No need to get stuck trying to figure out the complicated parts of the agreement. Draaft does all the hard work for you, so you can focus on what really matters—your business. Want to get it done quickly and easily? Try Draaft today and see how fast you can create your shipping agreement! Get started now!
