5 Elements of a Transport Contract That Cost More Than the Per-Kilometer Rate

In this episode of Rozmowy Logistyków, Piotr Skobało and Adam Sobolewski discuss what to include in a transport contract. They cover the clauses that need to be in FTL contracts — from rates and indexation, through carrier obligations, to KPIs, penalties, and insurance.

THE BASE PRICE ISN'T THE WHOLE BILL

The price per kilometer, freight rate, or pallet rate is just the starting point. The real cost gets added on through surcharges: waiting time for loading beyond an agreed limit, additional loading and unloading stops, trailer washing, ADR (hazmat) handling, or ferry crossings. If the contract doesn't spell out these line items, you'll only find out about them on the invoice. It's also worth writing down the rules for indexing the base price — what it's tied to and how often — so rate negotiations happen on predictable, planned dates, rather than on a phone call from the carrier once a quarter.

CARRIER OBLIGATIONS OFTEN LIVE OUTSIDE THE CONTRACT

In LTL and courier contracts, key rules are sometimes pushed out into "general terms of service" — a document the provider can change unilaterally. It's worth reading it up front: driver qualifications, vehicle equipment, health and safety rules (one retail client penalized a supplier for a driver missing a hi-vis vest or safety boots), communication rules for breakdowns, or subcontracting procedures. It's also worth applying the same standard you're held to as a supplier toward your client to your own subcontractors — in Europe, practically everyone uses subcontractors.

CARGO SECURITY HAS TO BE WRITTEN DOWN, NOT ASSUMED

Load securing to the EN 12195 standard, GPS tracking, transport corridors with an alarm if the route is deviated from, continuous temperature logging for controlled transport — none of these requirements apply automatically. If your goods need them (pharmaceuticals, deep-frozen products, high-value cargo), it has to be in the contract or an SOP annex, or it will be hard to enforce later. Good practice: describe your own business and requirements in a separate operational annex, rather than burying everything in the body of the main contract.

KPIs, SLAs, AND THE BONUS-MALUS RULE

On-time performance has to be defined numerically (e.g. 95%) with a defined measurement period — usually monthly. What isn't written down doesn't apply. A proven mechanism is bonus-malus: the carrier gets a freight surcharge for performance better than the agreed KPI, and a discount for performance below it. It's a fairer system than penalties alone — it motivates quality instead of just punishing its absence.

INSURANCE MATCHED TO THE CARGO

A carrier has to hold CMR liability insurance, but its coverage amount should match the value of the goods being transported — for non-standard cargo, it's worth buying additional cargo insurance for that specific shipment. Also write down the claims procedure: the channel, the documents required, and the carrier's response time. Logistics is usually 2-8% of a retail company's revenue, but cost of goods sold (COGS) can be 40-80% of the P&L — a few percent saved on the per-kilometer rate means nothing against a lost shipment the contract didn't protect.