Maritime Service Contracts

There are many terms in international shipping that people outside of the shipping industry may not understand until they need to use them. Maritime service contracts are on one of those terms. So what are maritime service contracts? They are contracts in the shipping industry that are between the shipper and the ocean carrier where the shipper agrees to ship a certain amount of goods and the carrier agrees to give a special rate just for that amount. These contracts are usually reserved for companies shipping large amounts of the same goods over and over so the carrier can be guaranteed that the contract will be fulfilled. With the exception of a few commodities, service contracts must be filed with the Federal Maritime Commission (FMC) which is the U.S.'s governing body for maritime laws. At the same time they must also be made public according to US Federal Law. This ensures a full disclosure of any special pricing so that there are no backroom type deals made. This also assists with groups like shipper's associations who leverage cargo based on volume over a period of time. This allows for more companies to participate in the lower freight rates which, in turn increases the amount of shipments being made with that carrier. Overall it will be mutually beneficial and as long as everything is properly published with the FMC, it can be a long term contract that both sides can count on for lowering costs and guaranteeing trade. If a company is shipping large quantities of the same commodity, it is in their best interest to ship with a service contract.