Shipping Agreement

What we’ll cover

• About Shipping Agreements
• Shipping Agreement FAQs
• Shipping Agreement Checklist

What is a Shipping Agreement?

A shipping agreement is an official contract made between parties to set out the rules for transporting goods by sea, air or land. It lists the type of cargo, the date and time of delivery, each party’s duties, the way payment is made and who is responsible for damages during shipping. By having this agreement, both the shipper and the carrier know what they need to do which helps avoid disagreements and allows goods to be shipped without problems.

When Can You Use a Shipping Agreement?

• To enforce rules ensuring exporters and shipping businesses move goods across borders safely and punctually.
• To explain what businesses and freight forwarders must do when organizing shipments for the shipper.
• For businesses that need to ship large volumes of goods such as raw materials, it is important to have clear terms for carrying out the transport, delivering and liability.
• To help online retailers sign agreements with logistics firms to efficiently ship products to their customers.

About Shipping Agreements

Learn how to create a Shipping Agreement that protects your cargo, defines clear responsibilities, and ensures smooth delivery every time.

How To Write a Shipping Agreement

A Shipping Agreement is a written agreement between two or more parties detailing the way goods will be shipped from one place to another. Any type of agreement you create in the transportation industry should be clear, avoid possible confusion and keep all parties safe from legal issues. There are ten main aspects you should add when creating an effective and strong shipping contract.

Define the Parties Involved

The parties in a shipping agreement are most often the shipper, who sends the goods and the carrier, who transports them. Freight forwarders and third-party logistics providers can be included if they are necessary.

Describe the Goods Being Shipped

State the type, how much, the weight and the nature of the cargo. As a result, any disagreements are avoided and the agreement is sure to include the right information about the shipment.

State the Mode of Transport

Make sure to identify if the shipment will happen by ocean, air, road or using mixed methods. It is also important to include the kind of transport vehicle involved (for example, container ship, truck, cargo plane).

Outline the Delivery Terms

Use your shipping terms and conditions to explain when and how your products will be delivered. Examples of Incoterms used are FOB (Free on Board) and CIF (Cost, Insurance, Freight) which set out who assumes the responsibility and cost at different points in the process.

Set Payment Terms

Indicate the method you will use to receive payment—prepaid, collect cash at delivery or on credit. Remember to factor in the prices for transport, packaging, taxes and customs duties in your plan. Set out the currency, the dates for payments and what will happen if payments are late.

Define Liability and Insurance

Specify who must be responsible for any damage or loss during the journey. Most such contracts involve a part about cargo insurance, indemnity and the limits of coverage for the shipment’s worth.

Include a Force Majeure Clause

It means parties cannot be held responsible if something unexpected (such as a natural disaster or a strike) prevents them from fulfilling the contract. A shipping contract should always mention this for managing risks.

Detail Dispute Resolution Procedures

Indicate which process will be used to solve disputes—arbitration, mediation or litigation. Include the law (for example, Indian Contract Act or UCC) and the place where the law will be applied.

Mention the Termination Clause

Make sure the shipping agreement states the reasons for one party to end the agreement. Among these are providing advance warning, breaking the contract or not following the duties stated in the transport contract.

Add General Provisions

Incorporate standard legal clauses such as:

• Entire Agreement
• Severability
• Amendments
• Confidentiality (if necessary)
• Bill of Lading Agreement reference
• Duration of the contract (fixed or renewable)

If you add these necessary points and clauses, your cargo shipping agreement or freight contract will be both legal and work well in practice. 

Shipping Agreement FAQs

Shipping Agreement Checklist

1. Make Your Contract

The first step would be drafting the key terms of the Shipping Agreement. Specify the manner of shipment, schedule, pay schedule, each party’s respective obligations, and who bears liability in case of loss or damage. You may want to initiate the document creation process now and then return later to make amendments.

2. Review Your Agreement Closely

Inspection of the agreement should be done for vital elements like Incoterms, insurance, packaging standards, and handling instructions. Of course, it should be reviewed and understood by all stakeholders-shipper, receiver, and carrier-to avoid disputes or misunderstandings once it is signed.

3. Correctly Sign Your Agreement

The agreement has to be signed by the authorized signatory of the shipper, the consignee, and if applicable, the freight forwarder/logistics provider. Certain agreements may be signed electronically; however, some jurisdictions may require original signatures or notarization.

4. Supply Copies to Each Party

Complying with the signing formalities means providing all parties with well-stored copies of the document, be it in digital format or hard copy. Any of these may need to be referred to when customs clearance is undertaken, when an insurance claim is required, or during dispute resolution.

5. Periodically Review for Changes

As trade policies, logistics methods, or partnerships change, your Shipping Agreement should be revisited to maintain its relevance. Modify any terms that relate to delivery timelines, freight charges, or service providers as business needs change.