Joint Tariff Agreement: What it is and How it Works
A joint tariff agreement (JTA) is a contractual agreement between two or more carriers that outlines the rates, terms, and conditions of the transportation services they offer. It is an important tool for carriers who want to establish a collective price for shipping goods, whether by land, air, or sea.
In a JTA, carriers agree to work together in setting rates and establishing rules for transportation services. The agreement is usually updated annually to reflect changes in the industry and to ensure that the terms remain fair and competitive for both the carriers and their customers.
One of the key benefits of a JTA is that it enables carriers to pool their resources and establish a unified pricing strategy. This can be especially beneficial for small and mid-sized carriers who may not have the same bargaining power as larger carriers. By working together in a JTA, carriers can negotiate better rates with shippers and improve their overall profitability.
Another benefit of a JTA is that it can help carriers to comply with government regulations. For example, in the United States, the Federal Maritime Commission (FMC) regulates ocean shipping rates and requires carriers to file their rates with the agency. By operating under a JTA, carriers can ensure that their rates are in compliance with FMC regulations and avoid penalties for non-compliance.
However, there are some potential downsides to operating under a JTA. For example, carriers may be required to give up some of their autonomy in setting prices and making other decisions related to transportation services. Additionally, if one carrier violates the terms of the JTA or goes out of business, the other carriers may be left with fewer options for serving their customers.
Overall, a joint tariff agreement can be a valuable tool for carriers who want to establish a collaborative approach to pricing and transportation services. By working together under a JTA, carriers can improve their bargaining power, comply with government regulations, and provide more efficient and cost-effective shipping solutions for their customers.