DEFINITION of 'Trailer Interchange Agreement'

 

A trailer interchange agreement is a contract that organizes the transfer of a goods being transported between parties to ensure it arrives at the specified destination. A trailer interchange agreement is required if a trailer of goods is being hauled by different truckers and trucking companies along its path towards end delivery.

BREAKING DOWN 'Trailer Interchange Agreement'

 

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 to transport goods.

The Reason for Trailer Interchange Agreements

In most cases, companies do not own all the transportation equipment involved in shipping goods to their final customer. It doesn't make sense for a company to own and manage fleets of ships, trains and trucks when other companies provide these services as their core business. Instead, companies contract transport out to third parties that handle shipping. These transport companies, in turn, operate in set networks. If a good starts in one logistical network, but ends in another, the transport companies will use a trailer interchange agreement to complete delivery.

How Trailer Interchange Agreements Work

Truckers often have to switch trailers while traveling around the country in order to meet overall scheduling across the transport network. For example, a trucker may regularly drive the route from Los Angeles to Denver. If goods from Los Angeles are bound for Chicago, however, the trucking company can arrange for transfer via a trailer interchange agreement in Denver so that the trailer reaches its final destination. The same trucker may be picking up another trailer for his return trip to Los Angeles that is part of another agreement ending in Los Angeles or further on. A trailer can switch between several companies and many drivers on its way across the country. In this way, trailer interchange agreements make it simpler to move goods by not requiring a single trucker to drive the entire distance.

Insuring Trailer Interchange Agreements

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. Alternatively, a company can purchase non-owned trailer physical damage which applies to non-owned assets even if there is no written trailer interchange agreement for the transport. This type of policy also has maximums as to the amount of damage that will be covered.

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