Trailer Interchange Agreement
Definition of 'Trailer Interchange Agreement'
A contract that arranges the transfer of a trailer to a second trucker so that the trailer can be delivered to its final destination, or until it can be transferred to another trucker. A trailer interchange agreement outlines the parties involved in the transfer of the trailer used to ship goods, the locations at which the trailer is to be exchanged, how the trailer is supposed to be transported, and the fee for transport. This sort of agreement is most common when semi-trailers are being used.
Investopedia explains 'Trailer Interchange Agreement'
In many cases, companies do not own all the equipment involved in shipping goods to their final destination. They will contract out to third parties that handle shipping, or will allow truckers to use their own equipment when making deliveries.
Companies that ship goods by semi-trailer are most likely to use a trailer interchange agreement, since truckers may switch trailers while traveling around the country in order to facilitate scheduling. For example, a trucker may drive the route from Los Angeles to Denver. The trucker will exchange the trailer in Denver so that the trailer reaches its final destination further away, while picking up a trailer for his return trip to Los Angeles. In this way, trailer interchange agreements make it simpler to move goods by not requiring a single trucker to drive the same distance.
A trailer interchange agreement makes the motor carrier – the trucker hauling the trailer – responsible for any physical damage caused to the trailer. Businesses involved in a trailer interchange agreement may require those hauling the trailer to have trailer interchange insurance. This type of insurance covers physical damage that may be caused to the trailer while it is being hauled by a party that does not own that trailer. The insurance coverage covers the trucker who is in possession of the trailer, and covers damage caused by fire, theft, vandalism, or collision. The policy has a deductible, and has limits to the amount of damage that will be covered.