The Rate Confirmation establishes the terms and price for a specific shipment between a carrier and the party paying for the service. This document precedes the physical movement of freight, ensuring all parties are aligned on the details of the transaction. It formalizes the commitment, turning a verbal agreement into a legally referenceable set of instructions. For shippers, carriers, and brokers, understanding this document helps manage expectations, secure payment, and avoid logistical disputes.
Defining the Rate Confirmation
The Rate Confirmation (RC) is a formal document issued by a freight broker or a shipper directly to the motor carrier transporting the goods. It serves as a legally binding agreement that formalizes the commitment to move specific commodities for an agreed-upon price. This document is the primary contract for the transaction. The RC outlines the exact terms under which the carrier agrees to execute the transportation service.
The RC defines the service expectations and corresponding compensation for a single transaction. It locks in the price and service requirements before a truck is dispatched, providing a safeguard against unexpected rate changes or service discrepancies. By signing the document, the carrier confirms acceptance of the load and all detailed terms.
Essential Components of a Rate Confirmation
The Rate Confirmation contains specific details categorized into sections that govern the scope of the freight move. A comprehensive RC leaves no room for ambiguity. These details ensure all operational and financial parameters are clearly defined before the carrier commits resources.
Shipment Details
This section defines the physical parameters and logistics of the load. It lists the pickup and delivery addresses, including the precise scheduled dates and times for both origin and destination appointments. A detailed description of the commodity is also included, noting the type of freight, total weight, and any specific dimensions or handling requirements, such as if the material is hazardous or fragile.
Carrier and Broker Identification
The document must identify the legal entities involved in the agreement: the carrier and the freight broker or shipper. This includes the full legal name, physical address, and contact information for both parties. Transportation identifiers, such as the carrier’s Motor Carrier (MC) number and USDOT number, are also displayed to ensure regulatory compliance.
Financial Terms and Rate Structure
The financial details state the agreed-upon payment for the transportation service. This includes the total freight rate, which may be a flat rate or a per-mile charge, along with a breakdown of any applicable surcharges. Common additions include the Fuel Surcharge (FSC) and accessorial charges, such as fees for extra stop-offs, lumper services, or border crossing fees.
Equipment and Service Requirements
The RC specifies the required equipment type necessary to safely and legally transport the load. This may include a 53-foot dry van, a refrigerated reefer trailer, or a flatbed. This section also outlines any specialized service instructions, such as the need for team drivers, a liftgate for unloading, or specific packaging or load securement protocols.
Payment and Cancellation Policies
This section manages the financial timeline and establishes rules for terminating the agreement. Payment terms are explicitly stated, detailing how and when the carrier will be paid, such as Net 30 days from delivery or through a Quick Pay option. The document also outlines the policy for Truck Ordered Not Used (TONU) fees and other cancellation penalties. This specifies the conditions under which either party can cancel and the resulting financial consequence.
The Role of the Rate Confirmation in the Shipping Process
The Rate Confirmation is generated immediately after a rate has been negotiated and accepted by the carrier and the broker or shipper. Once the negotiation is complete, the broker or shipper generates the document and sends it to the carrier for review and execution.
The carrier must sign and return the RC before the load is officially dispatched and before the driver receives the final pickup instructions. This step ensures the carrier has formally accepted all terms, including the route, cargo details, and payment amount, before committing equipment and drivers.
The signed RC is the final authorization for the carrier to proceed with the shipment. It guarantees the agreed-upon payment upon successful delivery and submission of required paperwork. Without a signed confirmation, the carrier lacks a financial guarantee, and the broker will typically withhold the load’s pick-up information until documentation is finalized.
Rate Confirmation Versus Other Key Shipping Documents
The Rate Confirmation has a distinct contractual and financial purpose that differentiates it from other common logistics paperwork. Understanding these differences is necessary for proper documentation and financial management.
The Rate Confirmation must be distinguished from the Bill of Lading (BOL), which is a receipt for goods and a contract for carriage. The BOL focuses on the physical movement, serving as a legal document that confirms the goods were received by the carrier in good condition and acting as the document of title for the freight. While the RC details the agreed-upon price and service terms, the BOL focuses on the description of the goods, the transfer of responsibility, and proof of delivery.
The Rate Confirmation also differs from the Freight Invoice, which is the request for payment issued after the service is completed. The RC is the agreement on the price before the service begins. The invoice is the actual billing statement that includes base charges and any accessorial fees incurred during transport, often referencing the RC and the BOL to justify the final amount due.
Consequences of an Unsigned or Invalid Rate Confirmation
Failure to properly execute or review the Rate Confirmation introduces financial and legal risks for both the carrier and the broker. An unsigned RC weakens a party’s position in a payment dispute, as there is no formal, written agreement to enforce the negotiated rate or terms. This lack of documentation can lead to non-payment or legal disputes over freight charges.
A poorly reviewed or invalid RC can also lead to disputes over accessorial charges, such as detention or layover fees, if the payment terms are not clearly defined. Additionally, a broker’s refusal to release pickup information until a signed RC is received can cause logistical delays, leading to missed appointments or potential fines from the shipper. The RC protects the financial interests of the carrier and ensures the broker has a legal basis for the transaction, making it essential for regulatory compliance.