A logistics contract is a set of agreements between two or more parties, where the scope of services to be rendered by the freight forwarder on behalf of the shipper for specified fees are clearly defined, enforceable and legally binding.
This logistics contract comes in form of documents which could be Proforma Invoice(signed by the shipper as a sign of agreement to the terms and conditions), Purchase Orders(POs), Service Level Agreements(SLAs),
The logistics contracts are expected to have details like, Payment terms, Delivery timelines, Cost of Service delivery, Origin of item, Destination of item. For a logistics contract to be enforceable, parties involved must be able to ensure that they fulfill their own part of the contact because effectively managing logistics contract is important from the start because key requirements are communicated, performance gaps and potential risks are constantly identified and addressed as a result.
How can you effectively manage a logistics contract?
1. Establish and Agree on the fundamentals:
The fundamentals of a logistics contract has to do with specifics like, the names and contacts of the parties, the scope of work (it is important to define the extent of the work to be carried out), a clear statement to define the period of time to which the 3 contract refers, agreed cost of rendering the service, periods of notice, and any exceptional reasons for termination, Dispute resolution (a course of action must be specified in case of future need), signatories to the contract must have the authority to engage the responsibilities of the respective parties to the contract, agreement clause to ensure that nothing else outside the
Written agreement is regarded as contractual between the parties unless
it is amended or varied in accordance with the agreement, A clause to state how amendments or variations to the agreement should be dealt with. This is usually by requiring the same to be in writing and signed by both parties and attached to the agreement.
2. Ensure the incoterms is well understood by both parties:
“Incoterms” is an abbreviation for International Commercial terms, and they are series of pre-defined commercial terms published by International Chamber of commerce relating to international commercial law. Incoterms are used in international commercial transactions or procurement processes, and their use is very much important because it sets out the delivery terms between the buyer and seller.
Incoterms allows the parties to designate a point at which the costs and risks of transport are precisely divided between the seller and the buyer. Incoterms also allocate responsibility for customs clearance/duties between the parties. Understanding the International Commercial Terms (INCOTERMS) is another effective means of managing a logistics contract; customer expectation and key requirements throughout the entire transaction process.
INCOTERMS would define the mode of delivery, who must arrange for customs clearance and licenses; passage of title (transfer of rights); transfer of risk and insurance responsibilities; what the delivery terms are; how transport cost will be allocated between the parties and when the delivery process is completed.
3. Communicate: Communication. Written communication is the most common form of business communication. Since emails and all forms of messages across multiple platforms can easily be sent to multiple recipients situated across offices, countries, and continents, it is essential for all professionals to develop effective written communication skills and to encourage the same in all employees. A clear, concise, and consistent message is the hallmark of effective communication
A firm understanding and effective management of the technical details of a logistics contract is as important as the contract itself. It ensures that the contracting parties are adequately rewarded for their commitment to contractual obligations.
If you need a reputable organization that can help you manage and execute your logistics needs or contracts, get in touch with us at Edas Global Supply Chain Limited. We have all it takes to see the success of your logistics projects or contracts from start to finish.
You can email us via info@edasglobalsupplychain.com or call+2347089921886.