In the international dangerous goods transport sector, shippers typically book space with carriers (shipping companies or airlines) through freight forwarders. However, direct dangerous goods carriers with significant scale and expertise are increasingly realizing that bypassing some intermediaries and establishing strategic partnerships directly with carriers can unlock significant value.
The bargaining power, operational transparency, and relationship stability afforded by this “direct shipper” status are unmatched by traditional models. Signing a long-term agreement (LTA or volume commitment agreement) with a carrier is a key step in solidifying this advantage into a long-term strategic asset.
I. Why do “direct dangerous goods carriers” offer unique advantages?
Unlike general cargo, dangerous goods transport carries higher risks, more complex operations, and stricter regulations for carriers. Therefore, a high-quality direct hazardous goods carrier is highly attractive to carriers:
Risk Control: Professional direct carriers maintain comprehensive internal compliance systems (MSDS, identification reports, precise classification, and compliant packaging) to ensure 100% accurate cargo declarations, significantly reducing the risk of fines, accidents, and reputational damage to carriers due to underreporting or misdeclaration. They consider you a “low-risk” customer.
Predictability & Stability: Direct carriers typically offer relatively stable and predictable cargo volumes over a long period of time. For carriers, this means more efficient and stable utilization of space and resources, eliminating the need to worry about finding sporadic cargo sources.
Operational Efficiency: Professional direct carriers are familiar with the dangerous goods booking, declaration, and delivery processes. They submit standardized and accurate documentation, and maintain smooth communication, minimizing operational delays at the port of departure and saving carriers time and management costs.
Profitability: A stable volume of dangerous goods cargo not only guarantees revenue, but the accompanying dangerous goods surcharge (DGS) is also a significant and highly profitable source of revenue for carriers.
II. The Core Strategic Value of Long-Term Agreements
A long-term agreement goes far beyond simply locking in prices; it represents an upgrade from a “transactional relationship” to a “partnership.”
Cost Optimization and Predictability: Locking in freight rates and surcharge levels for a future period (e.g., one year) mitigates volatile spot market fluctuations (especially during peak seasons when shipping capacity is tight), facilitating precise financial budgeting and cost control for businesses.
Core Space Protection: This is one of the core benefits of a long-term agreement. The agreement specifies the number of spaces the carrier must reserve for you. During peak seasons or on specific routes when shipping capacity is extremely tight, this guarantee is the lifeline of your supply chain, ensuring that your production operations are not constrained by logistics bottlenecks.
Priority Handling: After becoming a core strategic customer, your cargo may receive implicit priority in booking confirmation, loading priority, and emergency handling, further improving transportation efficiency and reliability. Deep Collaboration and Service Support: Establish direct, high-level communication channels. This allows you to receive faster, more professional responses and solutions from carriers when encountering operational difficulties, customs inspections, or requiring special support.
III. How to Successfully Negotiate and Sign a Long-Term Agreement? – A Four-Step Approach
Step 1: Internal Preparation – Build Your Value Proposition
Before approaching a carrier, you must digitize and document your strengths to create a compelling value proposition:
Volume Data: Collect historical shipping data from the past 12-24 months. This includes accurate data on routes, destination ports, monthly container volume/weight, commodity types (UN numbers, categories), and container sizes.
Future Forecast: Provide a 12-month volume forecast based on sales projections to demonstrate your stability and growth potential.
Proof of Professional Qualifications: Prepare a company profile, a dangerous goods compliance manual, and internal training records to demonstrate your status as a “high-quality, low-risk” customer.
Define Your Needs: Identify your core needs: prioritize securing shipping space or pursue the lowest freight rates? Or perhaps you need support for a special container type (such as a reefer)?
Step 2: Select and Engage – Identify Target Carriers
Market Research: Analyze each carrier’s strengths, services, reputation, and dangerous goods capabilities on your core routes (e.g., which shipowners are most friendly to lithium battery shipping).
Senior-Level Contact: Circumvent conventional sales channels and contact the carrier’s Key Account Manager or Strategic Accounts department. They have greater authority and perspective to negotiate long-term agreements.
Formal Meeting: Arrange a formal meeting to present your “value proposition” and clearly outline the benefits of the partnership for both parties.
Step 3: Agreement Negotiation – Focus on Key Terms
Negotiations shouldn’t focus solely on the basic ocean freight rate; consider the following comprehensively:
Guaranteed Space Clauses: This is crucial. Clearly stipulate the guaranteed weekly/monthly space (TEUs or KGs) and the compensation mechanism (e.g., free upgrades, financial compensation, etc.) if the carrier fails to fulfill its guaranteed space obligations.
Freight Structure: Clearly define all charges during the agreement’s validity period:
Base Ocean Freight/Air Freight
Dangerous Goods Surcharge (DGS Surcharge)—This is the biggest expense, so be sure to negotiate it.
Bunker Surcharge (BAF/FAF)
Terminal Handling Charge (THC)
All other surcharges (such as CIS, PCS, war surcharge, etc.)
(For air freight), specify the weight break and commodity breakdown.
Validity Period and Rollover Mechanism: Agreements typically last for one year. A “rollover mechanism” can be negotiated, automatically renewing or renegotiating the agreed-upon terms at a specified time before the current agreement expires.
Breach of Contract and Termination Clauses: Clearly define the rights and obligations of both parties. If you fail to meet the promised cargo volume, you may be subject to a deadweight charge. Conversely, if the carrier fails to provide the agreed-upon space, there should be corresponding penalties.
Step 4: Execution and Relationship Maintenance—Deliver on Commitments and Deepen Cooperation
Designate a Contact Person: Designate a dedicated internal contact person to liaise with the carrier’s account manager to ensure smooth communication.
Meet Volume Commitments: Strive to meet committed volumes; this is the cornerstone of maintaining a strong partnership and credibility.
Regular Reviews: Regularly (quarterly) review the implementation of the agreement with the carrier, resolve any issues, and plan the next phase of cooperation.
Become a “Model Customer”: Maintain high standards of compliance to strengthen your reputation as a “high-quality direct customer.”
IV. Important Reminder: Redefining the Role of the Freight Forwarder
Signing an LTA with a carrier does not mean completely abandoning the freight forwarder. A quality freight forwarder still plays a key role in the following areas:
Multi-location Coordination: If you ship to multiple cities, a freight forwarder can provide a unified booking window and local service.
Customs and Inspection: Handle complex customs declarations and hazardous materials declarations.
Inland Transportation: Arrange the transport of hazardous materials by truck from the factory to the port.
Fulfillment Support: You can even entrust a trusted freight forwarder to act on your behalf and execute specific operations based on the LTA agreement you have signed with the carrier.
Conclusion
For direct dangerous goods carriers with scale and expertise, negotiating long-term agreements directly with carriers is a strategic move that transforms compliance capabilities into core competitiveness. This goes beyond simple price negotiation. By establishing a trusting, stable, and collaborative strategic partnership, it builds a safe, reliable, efficient, and cost-effective international dangerous goods logistics channel, providing a solid foundation for your global operations.