The Case for Infusing Artificial Intelligence in Transportation Contract Management Processes

Every company has a process around contracts and contract management. Your company undoubtedly has to manage written agreements with customers, partners, and vendors. You’ll require a contract agreement whether you’re forming a partnership, purchasing something, or soliciting a vendor.


Most people think of contract management as simply drafting and signing a contract, but it’s much more complex than that. Contract management is carried out in different stages where first, companies have to plan and make a contract management system that works according to their needs and resources. Next, it’s time to put their contract management strategy into action after outlining it. Part of this entails consolidating all of your contracts and vendors into a single location.

Beyond this, as the contract comes to the end of its lifetime, it’s either renewed with new terms and agreements, or termination actions are taken to end the post-contract stage. This is the complete overview of the contract process from the beginning to the end of the contract lifecycle.

The many stages of the contract lifecycle make managing contracts a complex, time-consuming tasks – specifically if it’s being done manually. Because of this, companies are looking to deploy contract management solutions that help them gain a competitive advantage while reducing dependencies on manual effort. In fact, Gartner estimates that by 2024, the current amount of manual effort will for contract review will be reduced by 50% due to the adoption of artificial intelligence (AI)-based contract analytics solutions.

Adoption of contract management software in the transportation industry

According to a 2019 report, the global contract management software market is expected to grow at a CAGR of 13.5% from 2019 to 2024, rising from USD 1.5 billion in 2019. The rising demand for agile contract management software, changing compliances, and increased complexity due to the variety of sales and licensing models are expected to drive the growth of the contract management software market. Large businesses are required to deal with a large number of contracts that must be produced, saved, and shared with global businesses, so manual contract management is no longer a viable option.

Companies require structured contract management software that allows them to manage contracts effectively and efficiently in a short time. 80% of international deals involve contract negotiation and signing of contracts of any kind. This illustrates the need for reliable contract management software that provides applicable stakeholders with automated tools to fully optimize contract lifecycle processes.

Given the nature of the transportation industry—complex and changing regulatory requirements, volatile fuel prices and shipment volumes, complex supply chains, and thousands of legacy contracts—the opportunity to optimize contract operations and commercial relationships with contract lifecycle management (CLM) software is exponential. Adoption of digital contract platforms is going to be key, we predict, to adapting to globalization, eCommerce, changing customer expectations, and new compliance requirements.

What we know about AI in contract management

AI contracting software has the potential to improve how all businesses manage contracts in different ways. Advanced contract analytics solutions use natural language processing combined with AI to uncover or recommend an action in response to variable business performance insights. These sort of insights are generated through a variety of structured and unstructured data around contractual obligations between your organization and the businesses you are working with.

Based on pattern recognition and the way a document is drafted, AI contracting software can identify contract types. Because AI contracting software trains its algorithm on a set of data (contracts) to recognize patterns and extract key variables such as clauses, dates, and parties, a firm can better manage its contracts because it knows and can easily access what is in each of them.

AI capabilities also aid businesses in maintaining consistency in terms and usage across all of their contracts, reducing the risk of human errors. AI contracting software can also enable quick assessment of contract risk by identifying suboptimal terms and clauses.

All of this has an impact on the contracting processes you may be using. As this technology becomes more widely used, these improvements in processes, functionalities, and tools will make contracting faster, better, and smarter.

Types of contracts in the transportation industry

Transportation contracts form the foundation of the entire procurement process. The rates and terms outlined in them govern everything from the cost of moving a product to the impact it has on your bottom line. With that said, let’s look into an assortment of contract types that the transportation industry manages:

  • Maintenance agreements: These agreements govern maintenance of assets such as equipment, plants, trackage, or joint facilities.
  • Customer contracts: Contracts concerning customer sales and orders, which includes non-disclosure agreements, confidentiality agreements, shipper specifications, customer rules, and regulations.
  • Broker carrier agreements: This type of agreement is signed following an agreement on a freight rate. It contains information such as the agreement date(s), payment dates, invoicing procedure, and liability or insurance information.
  • Load tenders: This is a detailed arrangement that specifies who will get the freight. tenders; provide freight specifications, weights, and measurements; as well as contact information.
  • Rate confirmations: A type of agreement that legally binds both parties to the agreed-upon freight brokerage rate. These are often filed and related to ongoing freight transactions, and they may be ongoing.
  • Accessorial contracts: Detail any handling fees, detention and waiting time fees, refueling costs, and other unforeseen freight charges. These agreements recognize and regulate accessorial costs.

Inefficiencies in contract management processes

With years of experience working in the CLM and transportation domains, we’ve identified several inefficiencies in contract processes that have pushed our customers to adopt CLM software.

  • Constantly changing or lost templates

When a company disperses its contract templates through many locations, inconsistency and risks thrive. Standard templates can easily deviate, slowing down business processes as teams search for the most recent iteration of a template or attempt to redesign them as best they can.

  • Inconsistent contract language

Due to the broad disparity in formats, terminology, and languages, manually creating contracts is extremely time-consuming, creates unnecessary risk, and slows down the entire contracting process.

  • Losing track of contract stages

It’s easy to lose track of the current stage and version of a contract when multiple versions are saved in various locations and shared as attachments in email threads for redlining and approvals.

  • Overlook of contract obligations

Commitments, compliance requirements, potential discounts, and other targets can easily be overlooked if contracts aren’t carefully tracked across the entire organization throughout their entire lifecycle.


Naturally, the skills required for successful AI contract management are changing as a result of this technology. Given the nature of the software, adoption will lead to a greater focus on technical skills and processes, and less dependence on the traditional organizational skills required for this role. That being said, intuitive and UX-friendly CLM platforms democratize use of AI technology to make data-driven business decisions using contract intelligence.

The goal of contract management is to take all that legalese, and simplify and summarise it so that it can be used by the rest of the company. It’s important to have an experienced implementation partner advise on the data and guide it into the CLM framework and to successfully adopt a contract management software with AI capabilities.

Questions about a partnership or how to start adopting AI capabilities in your contract operations? Reach out here to our team of CLM and transportation experts to discuss a unique roadmap for your organization!

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