What to Look for in a Freight Contract Before You Sign

A freight contract is not a formality. It is the document that determines what happens when things go wrong — and in logistics, things will go wrong. Most businesses sign contracts without reading them carefully enough, and discover the consequences of that inattention only after a damaged consignment, a missed delivery, or a disputed invoice. The time to understand a freight contract is before you sign it.

The Liability Clause

The liability clause is the single most important section of any freight contract. It determines what you will be compensated if your cargo is damaged, lost, or delayed — and under what circumstances the logistics provider's liability is limited or excluded entirely.

Standard industry liability limits are often very low. Many contracts use per-kilogram rates derived from international freight conventions, which can mean that a damaged shipment worth KES 500,000 is compensated at a fraction of its actual value. Before signing, confirm:

• Whether liability is based on declared value, actual value, or a per-kilogram limit
• What the process is for declaring a higher value — and whether there is a surcharge
• Who bears the burden of proof in a damage or loss claim
• What the claim filing deadline is — missing it typically forfeits your right to claim
• What categories of cargo are excluded from coverage entirely

Transit Time Guarantees

"Best efforts" language is not a transit time guarantee. A contract that says your goods will be delivered "as soon as practicable" or "subject to traffic conditions" gives you nothing to enforce. Look for:

• Defined transit times — specific hours or days, not ranges with unlimited exceptions
• Defined exceptions — a force majeure clause should list specific types of events, not broad language that could excuse almost any delay
• Defined remedies — if a transit time is breached, what happens? Rate credits? Partial refunds? Or nothing?

A logistics provider who refuses to commit to defined transit times is signalling something about their operational confidence. Ask directly: what is your contractual transit time commitment on this route?

The Force Majeure Definition

Force majeure clauses exist to excuse performance in circumstances genuinely beyond a party's control — natural disasters, government actions, pandemics. However, poorly drafted force majeure clauses can effectively excuse almost any delay, including ones that are operationally preventable.

Watch for force majeure definitions that include:

• "Traffic congestion" — this is a known and manageable operational variable, not an act of God
• "Mechanical breakdown" — a provider with a maintained fleet should have contingency for this
• "Labour shortage" — vague enough to excuse almost any capacity failure
• Open-ended language like "any other circumstances beyond our control" — this is a blank cheque

A well-drafted force majeure clause also requires prompt notice from the party invoking it, sets a time limit on how long force majeure can suspend performance, and includes a right to terminate if the force majeure event extends beyond a defined period.

Rate Review Mechanisms

Fixed-rate contracts protect you from price increases but expose the logistics provider to fuel and cost volatility. Fuel-indexed or annually reviewed contracts are more common for ongoing freight relationships, and are reasonable — provided the review mechanism is clearly defined.

• Fuel surcharge clauses — understand exactly how surcharges are calculated. What index is used? How often can it change? Is there a cap on the surcharge as a percentage of base rate?
• Annual rate review — the notice period before a new rate applies should be a minimum of 30 days. If it is shorter, you have inadequate time to review alternatives.
• Volume commitment — if you are committing to a minimum volume in exchange for a preferred rate, understand the penalty for falling short, and ensure the committed volume is realistic based on your actual freight patterns.

What a Good Freight Partner Does Before the Contract

A logistics provider's behaviour before you sign is often the clearest indicator of how they will behave after you sign. Providers who are serious about long-term partnerships will, before contract execution:

• Conduct a route survey to understand your specific cargo requirements and access conditions
• Provide a written service level agreement (SLA) alongside the contract, defining performance standards
• Name a dedicated account manager with direct contact details — not a call centre number
• Explain their escalation process for cargo incidents clearly and in writing
• Offer a trial period for new routes or cargo types before full contract commitment

A provider who rushes you to sign, cannot answer specific questions about their operations, or avoids putting commitments in writing is showing you something important about how they operate. Take the time to read the contract, ask the questions, and choose the partner who earns the relationship before the ink dries.