About Shippers' Associations

Shippers' Associations generally are non-profit transportation membership cooperatives which arrange for the domestic or international shipment of members' cargo. Associations will contract for the physical movement of the cargo with motor carriers, railroads, ocean carriers, air carriers, and others. The ability to aggregate cargo and ship the collective membership cargo at favorable volume rates is the key to the existence of the modern day Shippers' Association. Associations have the flexibility and the expertise to provide a number of transporation logistics services. 

Shippers' Associations enjoy a favored position under the transportation laws. Historically associations have been exempted from regulation in the domestic and international transportation markets. These transportation cooperatives are not required to secure any federal or state licenses to conduct domestic or international operations. To aid the small and medium sized international shipper in obtaining volume rates and discounts available to large international importers and exporters, Congress recognized that Shippers' Associations enjoy the status as shippers and the right to enter into volume service contracts with carriers under existing Shipping statutes.

Shippers' Associations come in all forms and sizes. They have adapted to deregulation and the fluctuations in traffic patterns that have occurred as a result of changing domestic and international trade flows. Shippers' Associations can have as few as two and as many as several thousand members. Some Shippers' Associations limit their membership to entities shipping or receiving the same commodities or who are members of the same industry or industry trade association. Other associations may be general freight associations but limit their membership to shippers in the same geographic region. Annual revenues generated by associations may range from less than $200,000 to more than $100 million.

Shippers' Associations may be formed for a number of reasons. The most obvious reason is savings on transportation charges. Associations enable their members to obtain quality transportation services at a cost lower than that individually available to the members. A group of shippers acting collectively will often receive greater attention -- and more attentive services -- from motor carriers, railroads, and international carriers. 

Shippers' Associations provide exceptional flexibility. Shippers who seek a total transportation package may choose to join a traditional, or full service, Shippers' Association. This type of association, which has evolved over the past 100 years, primarily in the domestic market, has operational facilities and employees. The association will ship the goods in its own name, issue a shipping receipt to the association member, and process loss and damage claims on behalf of the member. The full service Shippers' Association provides a wide range of transportation alternatives to its members, usually having arrangements with trucking companies, rail companies, and ocean carriers to provide a door to door transportation service for the member or, if desired, to provide only one segment of the transportation movement.

A second form of Shippers' Association is a "rate negotiator" Shippers' Association. Shippers may chose this type of entity to negotiate their carrier contracts, perform a variety of logistics services, and take advantage of the collective bargaining ability of the group. This type of transportation cooperative dominates in the international market negotiating favorable rates on behalf of its members, usually in the form of a service contract with an ocean common carrier or conference. The rate negotiator Shippers' Association does not become involved in the operational aspects of the transportation movement but may assist in arranging a complete transportation package. Depending on the needs of the members, a carrier may either invoice the Association or bill the individual member.

Shippers' Associations are generally organized as membership corporations under state laws, function as any corporation would with a board of directors, bylaws, and business policies. A member is equivalent to a shareholder. As cooperatives, Asociations are entitled to special treatment under federal taxing laws if they issue patronage dividends to their members. Shippers' Associations are controlled by their members. Associations have annual membership meetings at which, among other things, the members will elect the board of directors. This board is generally charged with setting and implementing the policy of the association. Associations sometimes hire an outside person or company to manage the organization on a day-to-day basis.

The actual process of becoming a member may differ slightly from Association to Association. Generally, the prospective member is asked to complete an application form which will be placed for approval before the association's board of directors or a membership committee. The purpose of this procedure is to allow the Shippers' Association to assure itself that the applicant is a financially reliable firm and that the applicant's freight requirements are not inconsistent with the Association's normal operations.