What's the difference between a spot rate and a contract rate?

Spot rates are one-off shipment prices negotiated in real time, typically 30-50% higher than contract rates due to lack of volume commitment. Contracts lock negotiated rates for defined periods (usually 12 months) in exchange for volume commitments. Strategic organizations use contracts for 70-80% of regular freight needs and spot rates only for unexpected demand spikes.

How often should we renegotiate freight contracts?

Annual renegotiation is standard, aligned with contract renewal dates. However, market-triggered renegotiations—when fuel or commodity costs shift materially—may occur mid-contract. Fuel surcharges are the most volatile lever; a 30% diesel price swing can justify renegotiation discussions even within contract years.

What's a realistic cost reduction target through better contract management?

Typical savings range from 8-18% within 12 months. Savings come from rate renegotiation (3-8%), reduced accessorial charges through better SLA enforcement (2-5%), improved volume consolidation (2-4%), and SLA credit recovery (1-3%). Results vary by current contract maturity and market conditions.

Which KPIs should we track to measure freight contract performance?

Core KPIs include on-time delivery rate by carrier and lane, variance between contracted and invoiced rates (including accessorials), SLA credit capture rate, dispute frequency and resolution time, and the percentage of freight spend covered under contracts versus spot. Mature organizations also track savings realized versus negotiated targets and use those metrics to inform future bid events and carrier allocations.

How can CLM software help manage freight contracts across multiple regions and carriers?

A CLM platform centralizes all carrier agreements in one place, standardizes clause language and SLA structures across regions, and uses AI to extract comparable data fields (rates, surcharges, liabilities, renewal terms) from diverse contract formats. Integrated with TMS and finance systems, it applies those terms consistently in booking and billing, enforces regional compliance requirements, and provides leadership with a single, global view of carrier performance and cost trends.

Sirion | AI-powered CLM Insights & Resources

Contract Insights

Guide to Managing Contract Section Ownership Across Departments

Learn how modern CLM enables contract section ownership by department, supports mapping workflows, automates routing, and ensures accountability.

topics

Resources

Resources

Guide to Managing Contract Section Ownership Across Departments

RESOURCES & TOPICS

What is RFX in Procurement: The Strategic Framework Behind Smarter Sourcing

Surgical Redlines, Strategic Decisions: Implementing AI-Assisted Contract Negotiations

Surgical Redlines, Strategic Decisions: Implementing AI-Assisted Contract Negotiations

Understanding Arbitration Agreements: Meaning, Process, and Why They Matter in Contracts

Understanding IT Contract Negotiation: Building Confidence from the Ground Up

What Is Digital Contract Management? Definition, Benefits, and Industry Applications

Benefits of Contract Lifecycle Management Explained: From Faster Deals to Smarter Risk Control

What Is a Contract Management System and Why Does It Matter?

Confidentiality Agreements Explained: What They Are and Why Businesses Need Them

What Is a Consulting Agreement and Why Does It Matter?

What It Means to Be a Procurement Specialist: A Clear Path from Basics to Career

Change Order vs Amendment: Understanding Key Differences to Manage Contract Changes Effectively

Limitation of Liability vs Indemnification: What They Mean and Why They Matter