Partner with the Best: How to Build Risk Protection into Carrier Contracts

For shippers across the globe, risk protection is a high-stakes goal that begins long before carriers load freight and shipments arrive at their end destinations. It requires a ready strategy and proactive preparations—starting with partner vetting and carrier contracts. Taking the time to screen carriers and build sophisticated contracts mitigates a range of downstream risks—from late deliveries to unresolved damage claims—and increases supply chain flexibility in the face of unanticipated obstacles and economic downswings.

By upholding high safety and insurance standards, shippers can build risk protection into the entire carrier onboarding process, weed out unreliable partners, and give quality carriers the chance to shine.

Ensure carriers have proper licensing and high safety ratings

The best carriers comply with all applicable federal, state, and local laws—especially those related to safety and insurance coverage. When vetting carriers and drafting contracts, shippers should maintain strict safety standards, such as an evaluation of “fit,” “satisfactory,” or the highest rating described by the US Department of Transportation (DOT), Federal Motor Carrier Safety Administration (FMCSA), or the FMCSA’s Compliance, Safety, Accountability (CSA) program. 

If this safety rating changes, carriers should notify the shipper or 3PL. But if they skip this step, shippers must tightly monitor safety ratings after carrier onboarding, ensuring they aren’t surprised by rating dips. For example, CTSI-Global employs tools like the Safety and Fitness Electronic Records (SAFER) System and DAT to monitor carrier safety ratings on a daily basis. Carriers are required to announce any safety rating changes—particularly if their Federal Operating Authority is revoked, suspended, or rendered inactive. Should carriers ever slip down to an “unsatisfactory” or a conditional rating under any system, they are unauthorized to move customers’ freight.

Look out for comprehensive insurance coverage

When shipments get damaged or lost, strong carrier relationships can make the difference between revenue gains and losses. But to ensure accident compensation, shippers must first see that carriers are licensed and insured throughout the transportation journey, as authorized by the US DOT. Engaging carriers with the following insurance coverage contract obligations is an important step toward removing supply chain uncertainty.

  • General liability: $1,000,000 per occurrence
  • Commercial auto or commercial motor vehicle: at least $1,000,000 per occurrence, including hired and non-owned vehicles
  • Hazardous materials transport: $2,000,000 per occurrence, including environmental damages due to the release or discharge of hazardous substances
  • Cargo coverage: no less than $100,000 per occurrence
  • Cargo damage or loss: $1,000,000 per occurrence and reasonable workers’ compensation, as required by law

Match robust carrier contracts with secure storage

Carriers should transport all shipments under contract at the time of transportation—allowing no exceptions or double brokering. But even the strictest contract standards are only as valuable as how securely they are stored. 

Implementing a transportation system (TMS) is one-way shippers can ensure all carrier documents, rates, and terms are always organized and accessible. Tools such as CTSI-Global’s Honeybee™ TMS securely store all carrier documents in a consolidated platform for easy reference and analysis—and provide rapid data analysis to conduct informed and efficient carrier negotiations.

Proactively protect your supply chains with a logistics management tool

Strong carrier connections keep supply chains moving and customer relationships intact in the face of unexpected stumbling blocks. When it comes time to create these important relationships, CTSI-Global can match shippers with thousands of agile, accountable carriers—vetted on everything from security to performance—to readily scale their operations and meet their growth goals.

Contact us to start making more informed carrier decisions and protect your supply chains from day-to-day risk.