In the trucking industry, knowing how payments work is essential for both carriers and brokers. Carriers are usually paid using a fixed price trucking model. This setup ensures a consistent and predictable income for every load they deliver.
Brokers, however, are paid in different ways. Their compensation may be based on a fixed price per mile, per job, or hourly—depending on the contract. These differences in payment reflect the unique roles that brokers and carriers play in the logistics chain.
The relationship between a broker and carrier is often load-specific. This is where the Rate Confirmation Order (Rate-Con) becomes essential. The Rate-Con acts like a contract, outlining the fixed payment and delivery terms for the load. Like a purchase order, it ensures both parties agree on payment expectations.
After completing a delivery, the carrier sends an invoice. This includes proof of delivery and the Rate-Con. This process helps ensure the broker processes payment as agreed.
Fixed price models help brokers save time and manage costs. It also reduces delays in payment. In contrast, per-mile payment structures can create challenges. If a carrier takes a longer route or faces detours, they might claim they deserve extra pay. This often leads to disputes.
To avoid confusion, many brokers use a fixed rate along with additional charges. These may include demurrage or TONU (Truck Order Not Used) fees. Adding these charges improves payment clarity and helps avoid conflicts.
Key Differences Between Brokers and Carriers
Payment structures differ greatly between brokers and carriers. Carriers benefit from fixed rates per load, giving them predictable income. Brokers, on the other hand, must be flexible. Their rates depend on the load’s complexity, distance, or time involved.
Because of these differences, brokers must create clear and detailed contracts. This ensures both parties understand their obligations and how much they’ll be paid.
Many brokers prefer fixed price models. They offer better control over costs and improve efficiency. For both brokers and carriers, fixed-price agreements provide clear financial expectations from the start.
The Role of the Rate-Con in Fixed Price Trucking
A Rate Confirmation Order (Rate-Con) outlines all the important terms for each load. It includes the fixed rate, delivery timeline, pickup details, and more. This document is a binding agreement between brokers and carriers.
Brokers rely on Rate-Cons to set clear expectations. Once delivery is complete, the carrier submits an invoice along with the Rate-Con. This makes the payment process smoother and helps resolve any issues quickly.
By using Rate-Cons, brokers create a streamlined process that benefits both parties.
Reducing Disputes with Fixed Rates and Extra Charges
Per-mile pay can cause disputes—especially if detours or traffic add extra miles. Carriers may ask for more pay, which leads to delays or disagreements.
To avoid this, brokers often set a fixed load price and outline additional charges. These include:
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Demurrage – Charged when delays in loading or unloading occur.
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TONU (Truck Order Not Used) – Paid if a truck is dispatched but the load gets canceled.
These charges offer flexibility while keeping the core payment clear and fixed.
Conclusion
Fixed price trucking provides several advantages. It reduces payment disputes, saves time, and creates financial clarity. Brokers can better manage resources, while carriers enjoy steady, predictable pay.
Using tools like the Rate-Con and clear add-on charges (e.g., demurrage, TONU) helps both parties work more efficiently. Whether you’re a broker looking to simplify operations or a carrier seeking reliable income, understanding this payment structure is key to success in logistics.