We consider a supply chain where bulk material is carried by rail from, a plant to a warehouse by freight trains operating in a closed circuit. Material arrival and train cycle time is random. The stocking capacity at the loading terminal is limited and when this is full, the shipper moves material using an alternate, costlier mode. The carrier decides the number of trains in the closed circuit without considering supply chain performance or shipper costs. To overcome this inefficiency, we defined a two-sided transportation contract and also determined desirable contract parameters. In this paper, we investigate the effect of some key system, parameters on the contract performance using simulation.