Certified Supply Chain Professional (CSCP) Practice Exam

What characterizes contract carriers?

1. They are limited to specific regions

2. They enter into contracts with terms specified by the customer

3. They only transport goods for private companies

4. They are required to transport any cargo offered

The correct answer is: They enter into contracts with terms specified by the customer

Contract carriers are characterized by their business model, which involves establishing contractual agreements with specific clients. These contracts define the terms and conditions under which the carrier will transport goods, including aspects like pricing, delivery schedules, and the types of services to be provided. This flexibility allows contract carriers to customize their offerings to meet the particular needs of their clients, enabling them to build and maintain long-term relationships with businesses that require consistent and reliable transportation services. The other characteristics allotted to contract carriers do not apply universally. While some contract carriers may operate in specific regions, this is not a defining trait of all contract carriers. Moreover, contract carriers do not exclusively transport goods for private companies; they can serve a mix of private and public entities depending on the terms of their contracts. Lastly, they are not required to transport any cargo offered; instead, they have the option to accept or decline shipments based on their contractual agreements. Thus, the nature of their operations and the relationships they form with customers are what fundamentally define contract carriers.