A network system that implements quality of service (QoS) by rate limiting at a logical network entity is provided. The logical network entity includes multiple transport nodes for transporting network traffic in and out of the logical network entity. The system monitors traffic loads of the multiple transport nodes of the logical network entity. The system allocates a local CR and a local BS to each of the multiple transport nodes. The allocated local CR and the local BS are determined based on the CR and BS parameters of the logical network entity and based on the monitored traffic loads. Each transport node of the logical network entity in turn controls an amount of data being processed by the transport node based on a token bucket value that is computed based on the local CR and the local BS of the transport node.