Zycus recognized as a ‘Strong Performer’ in The Forrester Wave™: Contract Lifecycle Management, Q2 2023  Read More

The Need for Contract Management in Transportation and Logistics Industry

The global transport and logistics industry is enormous. As per a Boston Consulting Group survey report ‘Transport and Logistics in a changing world’,  transport and logistics is a whopping $ 3.1 trillion market. The popularity of e-commerce has added to the transportation and logistics industry boom and over the past decade, considerable growth has been seen across the transport industry value chain. To sustain in this uphill environment, service providers face the need to dive into digital transformation and go through unparalleled disruption by transforming technology as well as processes inherent in the legacy systems.

Globalization, along with population growth and an increase in disposable income have been increasing the demand for goods and services from across the world. This led the transportation companies to sign high-value buy-side and sell-side contracts and often deal in international transactions which are heavily regulated, with federal, state, local, and international laws that are reflected in contracts between the said companies, their suppliers, employees, contractors, customers etc.

Without an integrated system in place, legal and finance teams of transportation companies face considerable challenges associated with obligation and compliance arising out of non-visibility of existing contracts. Having a contract management system in place not only mitigates companies’ risk and liabilities but also streamlines contracting processes, enabling companies to generate profits and gain maximum value from their contracts.

Some of the day-to-day contracting challenges faced by global transportation and logistics companies are:

  • Manual contracting processes with most of the contracts being third party contracts with Wet signatures and no version management procedures
  • Sales teams and other suppliers and  vendors are globally placed, leading to ad-hoc manual requests of contracts authoring at varied timings due to different time zones
  • Contracts are all over the place without any central repository for retrieval
  • Disparate legacy systems for different purposes like contracts creation and contracts storage are not integrated and collaborative – like share point, spreadsheets, MS Outlook and other matter management tools
  • A constant need to change the contract terms like payment clauses in contracts, which is difficult in the existing state of contract management
  • A large number of senior management resources like attorneys work from different locations to review contracts lead to undue usage of time and effort, leaving them no time to focus on strategic goals of the organization
  • Lack of simple, streamlined process to track and analyze the contracts and their performances

Let us take a look at how Artificial Intelligence driven contract life-cycle management solutions are tackling contracting problems faced by transport and logistics industry:

How CLM is solving T&L Contracting Issues

Authoring third party contracts

Transportation and logistics companies almost always have to author their contracts in third-party templates, which, when done manually, is an extremely cumbersome and time-consuming process and can often lead to errors. These errors, however small, could make the company vulnerable to risks in the form of missed compliance and obligations, penalties, loss of reputation and many other liabilities.

CLM solutions ease the authoring process by using pre-approved templates and clauses. Artificial intelligence enables third party clause comparison and contract parsing making it easy to author contracts on third party paper. Moreover, AI can suggest proven, approved clauses and pre-defined key terminology by learning from the track records of past contracts. It also allows picking from multiple alternate language options that have been pre-approved to replace the standard language, under strict guidelines. This reduces risk, standardizes contract language and boosts productivity.

Searching existing contracts

Travel and logistics (T&L) companies deal in thousands of contracts, often multi-lingual and covering different geographies. Searching for a specific contract from vast, dispersed contract repositories can be a major pain-point without a proper system in place. A CLM solution has a centralized contract repository in place and Artificial Intelligence integration enables easy search of contracts through free text searches, meta-data extraction, and keywords. These capabilities also extend to third party templates and legacy contracts. This guarantees assured recovery of old contracts and saves time and effort in finding contracts.

Ensuring compliance and regulations

T&L industry is heavily regulated with countless federal, state, local, and international laws and regulations which are present across contracts depending on the region of the business dealings. And because of the filing diversity that differs from country to country, mode of transport, and type; without an integrated, streamlined CLM solution in place, it is almost impossible to know with certainty, if the contracts are in compliance with these laws like C-TPAT, Federal Commission Maritime Ruling, ocean regulatory programs, emission standards etc.

Artificially intelligent contract management helps by way of easing off the burden on manual tasks which are prone to errors and omissions. From authoring to tracking, automation covers all mandated regulations in pre-approved templates and clauses, and helps in detecting any omissions or changes in compliance and alerts the people responsible to amend them at the earliest. With AI, compliance in the T&L industry’s fast-changing and unexpected geopolitical environment becomes simple. The smart contract management tool is the best aide for the legal department to stay ahead of the regulatory changes imposed in various countries and regions.

Streamlining performance tracking and analysis

Contracts are at the core of the T&L industry and often with multiple high-value contracts running simultaneously, a lot of capital is locked in them. Tracking the performance of these contracts to ensure maximum returns is crucial for all organizations. But when there is no integrated, automated CLM solution in place, the companies get riddled with a myriad of challenges throughout the contracts’ life cycle.

Integrating contract management solutions with ERP and CRM systems like Salesforce introduces consistency as well as standardization to the processes. It also enables better performance tracking during the post-award stages.

Artificial intelligence powered CLM solutions come with advanced analytical intelligence. Timely and accurate analysis of on-going contracts across geographies and languages can give companies immense leverage to improve performance by bridging any gaps and gain maximum value from these contracts. User-defined dashboards can be created to track KPIs, milestones, obligations and any other parameters as needed. Triggers can be created to alert the responsible parties to make any amends, updates in the contracts as required. Higher visibility of contract performance can ensure better control, improved tracking and compliance management and overall contract performance.

Thus, for transport and logistics sector, where contracts play a large role on both buy and sell side,  where contracts are bound by highly complex regulations varying across geographies, and where large amounts of capital is locked in high-value contracts and thus bears a direct effect on the profitability and revenue of any transportation business; an automated, integrated, AI enabled contract management solution can reduce risks, increase profits, improve productivity, streamline end-to-end contract life-cycle and have far-reaching effects on the entire transport and logistics industry.


Willam Dyer is the Regional Vice President at Zycus, a leader in the Forrester Wave for Contract Lifecycle Management. William has spent more than a decade advocating CLM solutions for enterprises across geographies, making him a domain expert. He has successfully delivered ROI to numerous clients comprising legal leaders for Fortune 500 companies spanning different industries. In this stint in Zycus, his mandate is providing value and making a business case for global enterprises in the scope of a sales leader. His attention to detail and product expertise makes him the go-to person to strategize go-to-market plans.
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