Customer contracts and exclusivity

With any new business opportunity, there may be a need for capital expenditure to acquire new assets or retro-fit existing assets, to build further capacity into the existing asset base.  This is often a pre-condition of a tender to win work from customers. Transport companies with capital expenditure needs therefore, often seek sufficient volume certainty from their customers to ensure that they can operate profitably. 

It is common to see mechanisms such as requests for supply exclusivity, an offer of volume rebates and minimum volume commitments sought from customers.   These all have the intended effect of trying to build a minimum revenue base from which to derive certainty of earnings and hedge the capital expenditure decision.