Contract Rate
A pre-negotiated freight rate between a shipper and carrier for a set period.
Definition
A contract rate is a freight rate agreed upon between a shipper and carrier for a specified time period, typically 6-12 months. Contract rates provide stability and predictability for both parties, unlike spot rates which fluctuate daily. Contract rates are generally lower than spot rates during tight capacity but higher during soft markets. Large carriers derive 70-80% of revenue from contract freight.
Why it matters to you
Contract freight is what makes a week predictable. Rates are locked for a period, so you give up the peaks of a hot spot market in exchange for knowing the truck has work. For a company driver this is invisible but important: carriers heavy in contract freight generally offer steadier miles, which is what actually determines your pay.
FAQ
What does Contract Rate mean?
A pre-negotiated freight rate between a shipper and carrier for a set period.
Why does Contract Rate matter to a driver?
Contract freight is what makes a week predictable. Rates are locked for a period, so you give up the peaks of a hot spot market in exchange for knowing the truck has work. For a company driver this is invisible but important: carriers heavy in contract freight generally offer steadier miles, which is what actually determines your pay.
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