What Is a Contract Carrier?

A contract carrier is a business which works with a select group of shippers to move people and goods between locations serviced by the contract carrier. Such carriers have specific contracts of carriage with the shippers they work with. Sometimes, this carrier only works with one shipping company, while others may have contracts with several, depending on the size of the carrier and the needs of its clients.

This contrasts with a common carrier. Common carriers accept shipments of goods as well as passengers from anyone who will pay and provide transportation within their service area. Many airlines, for example, are common carriers: Anyone can book a seat on any flight that has available seats. Contract carriers have no obligations to provide general services to anyone who asks and usually limit the nature of the services they provide.

The contract carrier establishes an agreement with shippers which spells out the kinds of shipments the carrier will accept, where the carrier will take them, and the shipping fees which the shipper will be obliged to pay. Shippers in turn collect these fees from their customers. For example, a carrier which offers delivery of bread from community bakeries has a contract with each bakery to collect and deliver its bread, and the bakery in turn charges customers and retailers who receive deliveries a delivery charge.

Some transportation companies offer highly specialized transport services such as medical transport. These companies have personnel who have received unique training so that they can offer appropriate services to their customers. For example, a carrier which flies organ and tissue transplants, sensitive medications, and patients has a staff which is familiar with the special needs involved in these kinds of transportation situations. In exchange for charging higher fees than common carriers, such carriers offer a high standard of service.

A contract carrier can be as small as a single person with a delivery van or as large as an international company with a fleet of vehicles including trucks, aircraft, traincars, and ships. Usually consumers interact with these carriers only indirectly, in situations where they make arrangements with shippers and those shippers in turn contract with a carrier to get a shipment to its destination. Like common carriers, contract carriers may be prohibited by law from carrying certain types of items, including illegal and dangerous materials. People who attempt to ship such items without disclosing them can be subject to penalties.