Cost Commitment

Tags: Glossary

A buyer and seller agreement to purchase or sell goods at a certain price within a specific time frame.

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Al Sharqi Shipping is a leader in the logistics industry with more than 30 years of experience in guiding and moving freight across the globe.

What does Cost Commitment mean?

cost commitment” refers to the amount of money that a shipper agrees to pay to a carrier for the transportation of goods. This cost commitment is typically based on a negotiated rate, which takes into account factors such as the type of goods being transported, the distance of the shipment, and the mode of transportation used. 


The cost commitment represents a contractual obligation on the part of the shipper to pay the agreed-upon amount for the transportation of the goods. This commitment may be made in advance of the shipment, or it may be based on actual shipping costs incurred during the transportation process. 


The concept of cost commitment is important in shipping because it helps to ensure that carriers have a reliable source of revenue to cover their operating costs and make a profit. At the same time, shippers benefit from the predictability and consistency of a negotiated cost commitment, which allows them to better plan and budget for their shipping expenses. 

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