Contract carriers have specific contracts with select shippers to transport goods and people, while common carriers accept shipments from anyone. Contract carriers offer specialized services and have agreements with shippers regarding the types of shipments and shipping charges. They may be as small as one person or as large as an international company.
A contract carrier is a business that works with a select group of shippers to move people and goods between locations served by the contract carrier. These carriers have specific contracts of carriage with the shippers they work with. Sometimes, this carrier works with just one shipping company, while others may have contracts with several, depending on the size of the carrier and the needs of its customers.
This contrasts with a common carrier. Common carriers accept cargo and passenger shipments from whomever 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 seats available. Contract carriers are under no obligation to provide general services to anyone who requests them and usually limit the nature of the services they provide.
The contract carrier enters into an agreement with the carriers which spells out the types of shipments the carrier will accept, where the carrier will pick them up, and the shipping charges the carrier will be required to pay. The shippers in turn collect these commissions from their customers. For example, a courier offering delivery of bread from community bakeries has a contract with each bakery to collect and deliver its bread, and the bakery in turn charges the customers and retailers who receive the deliveries a delivery fee.
Some transport 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 courier who flies organ and tissue transplants, sensitive medications, and patients has staff familiar with the special needs involved in these types of transport situations. In exchange for charging higher fares than common carriers, such carriers offer a high standard of service.
A contract airline can be as small as one person with a van or as large as an international company with a fleet of vehicles including trucks, aircraft, trucks and ships. Usually consumers only interact with these carriers 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. Individuals who attempt to ship such items without disclosing them may be subject to penalties.
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