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Multimodal transport Essay

In its essence Multi Modal Transportation of goods means transportation of cargo from the premises of the shipper to those of the consignee, by more than one mode of transportation, under a single contract which has its evidence in form of a single multimodal transport contract. As a general rule criteria such as Speed, Safety, Reliability, Availability and Flexibility in any transportation system ensures an efficient door to door service & there by determine the quality& success of any mode of transportation.

Traditionally, a system of unimodal transportation was in vogue. Under this system of transportation, cargo used to be carried by a single carrier, this was later on replaced by the concept of segmented transportation, where in each leg of cargo transportation began to be carried out by different modes, under a series of separate set of contracts, each of which was being independently entered for each segment of transportation, from the place of its dispatch to that of its final destination.

However multimodal transport on account of its ability to minimize loss of time at Transshipment points, coupled with its encouraging faster transit of goods, reducing documentation formalities and its success in saving costs, scored over the existing modes of cargo transportation, and became the primary choice of majority of cargo consignors from around the world. The Success of the multimodal system lies in its initiative to harness upon the positive aspects of each mode of transportation.

Apart from encouraging door to door delivery of merchandise, Inclusion of road transport in the multi-modal system has even solved the pressing problem of connectivity of hinterland based indigenous industries with sea ports. This has in fact spiraled abundant export of local indigenous products in international markets. 1 On account of its advantages over the Segmented and Uni-Modal systems of Transportation, the Multi-Modal system of transportation has become so popular that it has become a standard practice of trade between developed countries and has been gaining steady popularity in developing countries as well.

OBJECTIVE 1. To understand the regulatory existing framework with regard to transport and trade facilitation; 2. To comprehend transport usage in Lao PDR and to examine the factors affecting modal choice in Lao PDR; 3. To explore and quantify the various multimodal transport corridors that are available to shippers and consignees in Lao PDR when trading internationally; 4. To assess the reliability of these multimodal transport corridors; 5. To determine how and by whom should these multimodal transport corridors be managed; 6.

To propose a conceptual model for logistics decision-making. HYPOTHESES The purpose of this study is to explore three main hypotheses: 1. The selection of particular transport modes or combination of transport modes is constrained by a number of factors that are related to transport infrastructure, the nature of the product being transported, the transport decision-maker, the transport service offered and the prevailing commercial environment. 2.

The most frequently utilised multimodal transport corridor for international trade may not be the most efficient or reliable, or even the cheapest or the most competitive. 3. The management of multimodal transport corridors is best performed by freight forwarders. REVIWE OF LITRATURE A limited number of studies have been conducted on transport corridors in the region (Leinbach & Chia, 1989; ESCAP, 1993 & 1994a; ADB, 1998). The main purpose of these studies was to identify the main non-physical impediments as well as to promote cross-border trade facilitation.

One of the major limitations of these studies was the fact that they did not assess alternative scenarios for corridor selections. The other limitations were that none of these studies explored freight cost structure, transit time and reliability of multimodal transport corridor s in the region within an international supply chain context. Some authors (Boerne, 1990; Beresford & Dubey, 1990; Levander, 1992; Christopher, 1998; Beresford, 1999a) have modelled freight cost structure and transit time of European or North American multimodal transport corridors.

Very little equivalent work has been carried out in South East Asia, which is why there is a need for research to be conducted on multimodal transport corridors in South East Asia. This research, therefore, presents new data and empirical insights into the selection of modal choices and route choices along multimodal transport corridors in South East Asia while proposing a conceptual model for logistics decision-making for routeing and mode selection MULTIMODAL TRANSPORT A. MEANING

The most authoritative definition of the term “international multimodal transport” is provided in art-1 (1) of the United Nations Convention on International Multimodal Transport of Goods 1980 (hereinafter referred to as the MT Convention) which reads as: “International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country” This

definition should be read in conjunction with the definition of the term “multimodal transport operator” (MTO) provided in article 1(2) of the MT Convention, which provides: “Multimodal transport operator’ means any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract.

” Thus, the main features of a multimodal transport are: the carriage of goods by two or more modes of transport, under one contract, one document and one responsible party (MTO) for the entire carriage, who might subcontract the performance of some, or all modes, of the carriage to other carriers. The terms “combined transport” and “inter-modal transport” are often used inter-chageably to describe the carriage of goods by two or more modes of transport. B. ADVANTAGES OF MULTIMODAL TRANSPORT

Minimises time loss at trans-shipment points : Multimodal transport, which is planned and coordinated as a single operation, minimises the loss of time and the risk of loss, pilferage and damage to cargo at trans-shipment points. The multimodal transport operator maintains his own communication links and coordinates interchange and onward carriage smoothly at trans-shipment points. Provides faster transit of goods : The faster transit of goods made possible under multimodal transport reduces the disadvantages of distance from markets and the tying-up of capital.

In an era of Globalization the distance between origin or source materials and consumer is increasing thanks to the development of multimodal transport. Reduces burden of documentation and formalities : The burden of issuing multiple documentation and other formalities connected with each segmented of the transport chain is reduced to a minimum. Saves cost : The savings in costs resulting from these advantages are usually reflected in the through freight rates charged by the multimodal transport operator and also in the cost of cargo insurance.

As savings are passed onto the consumer demand increases. Establishes only one agency to deal with : The consignor has to deal with only the multimodal transport operator in all matters relating to the transportation of his goods, including the settlement of claims for loss of goods, or damage to them, or delay in delivery at destination. Reduces cost of exports: The inherent advantages of multimodal transport system will help to reduce the cost of exports and improve their competitive position in the international market.

DIFFERENCE BETWEEN MULTI-MODAL TRANSPORT CONTRACT & OTHER CONTRACTS Unlike other contracts MTO acts as the principal and not the agent of the shipper, in containerized transport it is often difficult to determine the point at which the cargo was damaged , while in case of multi modal transport cargo owner will have no difficulty because he is bound by just one contract, and can sue under that very contract, while in case of other transport contracts, cargo owner will have to determine the stage at which the goods were damaged, this is particularly important for suing the responsible carrier, in instances where he is not able to determine the stage of journey at which goods were damaged, then he might be forced to claim against all carriers involved and this shall lead to additional expenses. LAWS RELATING TO MULTI MODAL TRANSPORT INTERNATIONAL LEVEL A. The MT Convention 1980

The United Nations Convention on Multi-modal transport of goods-1980 held in Geneva, has been quite instrumental in encouraging the development of the Indian multi-modal transportation laws, it has in fact been a great source of inspiration and to say the least is the very foundation on which the multi modal law of several countries including ours are based. The importance of the aforesaid convention can be gauged from the fact that there has been a growing consensus on International Multi-modal Law being considered as the very means of facilitating the orderly expansion of world trade. Main Objectives of the UN Convention on International Multi-Modal Transportation of Goods.

The Primary objectives of the aforesaid convention were to encourage the: Orderly development of international multi-modal transportation in interest of all countries while side by side considering the special problems being faced by the transit countries. Determining of the rules for carriage of goods by/under international multi-modal transport contracts, including equitable provisions concerning liabilities of MTO’s. Laying down of emphasis upon the need to have regard to the special needs, interests and problems of developing countries, such as those relating to introduction of new technology, cost efficiency & maximum use of local labor and insurance in their multi-modal systems. Assurance of an adequate emphasis upon the need for creating a balance of interests between suppliers and users of such multi-modal transportation services.

Emphasis upon the need to streamline custom procedures, while giving due regard to problems of transit countries. The UN Multi-modal Convention Agreed To the Following Basic Principles: ? Fair balance of interest, between developed and developing countries should be established in International Multi-Modal Transport. ? There should be consultation with regards to terms and conditions of service both before and after the introduction of any new technology in multi-modal transportation of goods between multi-modal transport operator, shipper, shipper’s organization and appropriate national authorities. ? The Liability of the multi-modal transport operator under this convention shall be based upon the principal of presumed fault or neglect.

Scope of Application of the UN Convention on Multi-Modal Transportation: Provisions of the convention shall apply to all contracts of multi-modal transport between persons in two states if: (a)The place of taking charge of goods, by the multi-modal transport operator (as provided in the multi-modal transport contract) is located in the contracting state or (b) Place of delivery of goods as mentioned in multi-modal transport contract is located in any of the contracting states. Mandatory Application of Convention When Indispensable: Where a multi-modal transport contract has been concluded in accordance with the convention, provisions of such convention shall be mandatorily applicable to such contract.

Regulations With Regards To Control of Multi-Modal Transport Under the UN Convention: The UN Convention lays down that: The Convention shall not be incompatible with application of any national law relating to regulation and control of transport operations, including the right of licensing of the multi-modal transport operators, participation in multi-modal transport and all other steps in national, economic and commercial interest. The Multi-modal transport operator shall be bound to comply with the: (a) laws applicable in the country in which he operates (b) along with provisions of this convention. B. UNCTAD/ICC Rules for Multimodal Transport Documents

The UNCTAD/ICC Rules for Multimodal Transport Documents have been incorporated in widely used multimodal transport documents such as the FIATA FBL 1992 and the “MULTIDOC 95” of the Baltic and International Maritime Council (BIMCO). The Rules entered into force on 1st Jan of 1992. The main features of the UNCTAD/ICC Rules are the following: The Rules do not have the force of the law but are of purely contractual nature and apply only if they are incorporated into a contract of carriage, without any formal requirement for “writing” and irrespective of whether it is a contract for unimodal or multimodal transport involving one or several modes of transport, or whether or not a document has been issued2.

Once they are incorporated into a contract, they override any conflicting contractual provisions, except in so far as they increase the responsibility or obligations of the multimodal transport operator. The Rules, however, can only take effect to the extent that they are not contrary to the mandatory provisions of international conventions or national law applicable to the multimodal transport contract (article 13). Similar to the MT Convention, the liability of the MTO under the Rules is based on the principle of presumed fault or neglect3. Although the basis of liability of the MTO under the Rules is similar to that under the MT Convention, there are significant differences between them. 1. Unlike the MT Convention, under Rule 5.

1, the MTO is not liable for loss following delay in delivery unless the consignor has made a declaration of interest in timely delivery which has been accepted by the MTO. 2. if the multimodal transport involves carriage by sea or inland waterways, the MTO will not be liable for “loss, damage or delay in delivery with respect to goods carried by sea or inland waterways when such loss, damage or delay during such carriage has been caused by: act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship; fire, unless caused by the actual fault or privity of the carrier” (Rule 5. 4).

These defences, however, are made subject to an overriding requirement that whenever loss or damage resulted from unseaworthiness of the vessel, the MTO must prove that due diligence was exercised to make the ship seaworthy at the beginning of the voyage (Rule 5. 4). The provisions of the Rule 5. 4 are intended to make the liability of the MTO compatible with the Hague/Visby Rules for carriage by sea or inland waterways. Similar to the MT Convention, the period of responsibility of the MTO includes the period from the time he takes the goods in his charge until the time of their delivery. Furthermore the MTO is also liable for the acts and omissions of his servants, agents or any other person of whose services he makes use for the performance of the contract (Rule 4. 2). 3.

Rule 10 sets the period of time-bar at 9 months. Thus, the MTO will be relieved from liability unless the suit is brought within 9 months after delivery of the cargo, or of the date when the cargo should have been delivered. This is to allow the MTO possibility of instituting recourse action against the performing carrier, as most unimodal conventions such as the Hague/Visby Rules set the time-bar period at 1 year. The MT Convention provides for a period of two years. 4. The Rules envisage the possibility of issuing both “negotiable” and “non-negotiable” multimodal transport documents, including evidentiary effect of information contained in the document (Rules 2. 6 and 3).

However, the Rules, being of purely contractual nature, it is doubtful whether their incorporation into MT documents would have the effect of creating a negotiable document in all jurisdictions. Rule 3, concerning evidentiary effect of the information contained in the multimodal transport document, provides that such information shall be prima facie evidence of the taking in charge by the MTO of the goods as described in the document unless contrary indications, such as “shipper’s weight, load and count”, “shipper-packed container” or similar expressions, have been included in the printed text or superimposed on the document. This would mean that such pre-printed clauses would destroy the evidentiary value of the document which is clearly undesirable.

The Rule further provides that proof to the contrary shall not be admissible when the MT document has been transferred to the consignee, who in good faith has relied and acted on such information. Unlike the MT Convention, the Rules do not include any provisions dealing with jurisdiction and arbitration. Multimodal transport documents currently used in practice usually provide for any dispute to be determined by the courts in accordance with the law at the place here the MTO has his principal place of business. NATIONAL LEVEL Purpose of Enactment of Multi Modal Law: In view of various measures for liberalizing control and simplifying procedure for facilitating smooth flow of international trade and export promotion, there arose an immediate need to regulate the multi modal transportation of goods by law.

Need for the enactment of this legislation in India was all the more inevitable, considering the fact that interruption in continuous movement of goods, from their place of origin to that of their destination needed attention for serving the larger commercial interests ,which are considerations quite often relevant to all developing countries such as India.. Thus following considerations were relevant, while enacting a law for governing multi- modal transportation of goods. • A Multi-Modal Law was needed for reducing costs and delays& for improving upon the quality of transportation services. • For determining liabilities & responsibilities of multi-modal transport operator for loss or damage to goods. • To reduce and eliminate interruption in continuous movement of goods from their place of origin to that of ultimate destination. • Multi-Modal law was also necessary to enhance trade and commerce. Reasons for Enactment of Multi-Modal Law In India

International Transportation of general cargo has undergone structural changes, due to advancement of technology, especially with the advent of container revolution & containers have popularized the use of more than one mode of transport and now carriers are being globally used in International trade. • Multi- Modal transport has become a standard practice in trade between developed countries and is now gradually spreading to developing countries. • Multi-Modal system benefits both the consignor as well as the consignee. • India’s overseas general cargo trade has also started moving in containers, now containerized cargo is moving from hinterland (inland container depots set up in countries, connect hinterland to the ports, to

the ports ,& there by facilitate containerized trade, now containerized handling facilities are being developed at all major ports & railway flat wagon inland container depots are also being adequately developed. An overview of Multi-Modal Transport Act 1993 India’s Multimodal Transportation of Goods Act 1993 provides for “the regulation of the multimodal transportation of goods, from any place in India to a place outside India, on the basis of a multimodal transport contract and for matters connected therewith or incidental thereto. ” The Act defines the term “multimodal transportation” as the “carriage of goods by two or more modes of transport from the place of acceptance of the goods in India to a place of delivery of the goods outside India” (sec-2 (k)). The Act also includes provisions for regulation and conditions for registration of the MTOs.

Definitions: The list of definitions provided in sec 2 includes those of the terms carrier, consignee, consignment, consignor, delivery, endorsee, endorsement, goods, mode of transport, MT contract, MTO, as well as negotiable and non-negotiable multimodal transport documents. No definition of an MT document itself is provided, and the MT contract is merely defined as “a contract entered into by the consignor and the MTO for multimodal transportation”. 4 Documentation: Provisions of chapter III of the Act, dealing with the issuance of the MT document, its contents, reservations and evidentiary effect as well as the responsibility of the consignor, are mainly derived from the MT Convention. Liability of the MTO

Basis of liability: The MTO is liable for any loss of, damage to, or delay in delivery of, the consignment as well as any consequential loss or damage arising from such delay, if such loss, damage or delay took place while the goods were in his charge. The MTO, however, is not to be liable if he proves that no fault or neglect on his part or that of his servants and agents, had caused or contributed to such loss, damage or delay in deliver(sec-13 (1)). While it is evident from the provision of sec-13 (1) that the MTO is liable for loss, damage or delay while the goods are in his charge, there is no provision specifically setting out period of responsibility of the MTO.

Localized damage: Provisions of sec- 13 (1) seem to govern the liability of the MTO both in cases of localized and non-localized damage, since the section 15 of the Act makes only the limits of liability of the MTO subject to the relevant law applicable to the stage of transport during which the loss or damage is known to have occurred (i. e. modified network system). Delay in delivery: Similar to the UNCTAD/ICC Rules, the MTO is only liable for loss or damage arising from delay if the consignor has made a declaration of interest in timely delivery, which had been accepted by the MTO (sec-13 (1)). The definition of “delay in delivery” is provided by way of explanation to the relevant section of the Act, that is sec- 13 (1).

The claimant may treat the consignment as lost if it has not been delivered within ninety consecutive days following the date expressly agreed for delivery or the date it should have been reasonably expected to be delivered5. Limitation in liability: Provisions dealing with the limitation of liability of the MTO for loss, damage or delay is based on the UNCTAD/ICC Rules. Thus, the MTO’s liability is limited to 2 SDR per kilogram of the gross weight of the consignment lost or damaged, or 666. 67 SDR per package or unit, whichever is the higher. And if according to the MT contract, no carriage by sea or by inland waterways is involved, the liability limit is increased to 8.

33 SDR per kilogram of the goods lost or damaged (sec- 14 (1) (2)). In case of localized damage, unless the nature and value of the goods have been declared before they have been taken in charge by the MTO, the limit of liability of the MTO for loss or damage will be determined in accordance with the provisions of the relevant laws applicable to the mode of transport during which the loss or damage occurred. Any stipulation to the contrary in the MT contract shall be void and unenforceable. The MTO’s liability for delay in delivery and any consequential loss or damage arising from such delay, is limited to the freight payable for the delayed consignment (sec-16).

Similarly provisions dealing with the assessment of compensation for loss or damage, loss of right to limit liability, the aggregate liability of the MTO and notice of loss or damage to goods, are based on those of the UNCTAD/ICC Rules. The Act also includes, in sec. 21, special rules dealing with the shipment of dangerous goods which are based on those of the MTC6. Jurisdiction: Provisions of sec. 25, dealing with jurisdiction, are based on those of art. 26 (1) of the MT Convention, giving the claimant a wide option for instituting an Arbitration: As far as the arbitration is concerned it is merely provided that the parties to a MT contract may agree to submit any dispute relating to multimodal transportation under the Act to arbitration. The place of, and procedure for, such arbitration is left to be specified in the MT document (sec-26).

Time-bar: Similar to the UNCTAD/ICC Rules, a period of nine months has been fixed for instituting an action, under the provisions of the Act, against the MTO. The limitation period commences from the time of delivery of the goods, the date they should have been delivered, or the date on which the party entitled to receive the goods could treat them as lost (sec-24). Lien: Provisions are also made concerning the MTO’s in right of lien, for payment of freight under the MT contract, on the goods and on the document in his possession. Furthermore, non-delivery of the goods in the exercise of the MTO’s right of lien is not to be considered as delay in delivery (sec-22).

The Act is to override any other enactment and is to have effect notwithstanding anything inconsistent therewith contained in any other law (sec-29). Thus, an MT contract inconsistent with the provisions of the Act shall be void and unenforceable (sec- 28). CONCLUSIONS Thus, to conclude Multimodal transport refers to a transport system operated by one carrier with more than one mode of transport under the control or ownership of one operator. In simple terms, it means, carriage of goods by two or more modes of transport such as a combination of truck, train, and airplane or ship in succession to each other. In international trade due to its very nature, goods indispensably pass through the hands of more than one carrier and one mode of transportation.

Under conventional system of transportation, consignee enters into separate contracts with each other where the liability of each carrier is limited to the service provided by him. On the other hand, under multi-modal system only the consignor or his agents have to make all arrangements required for trans-shipment of goods from one mode to another, so much so that this even includes warehousing of such goods i. e. the carrier organizing the transport takes responsibility for the entire door-to-door transport and issues a multimodal transport document. Therefore, multimodal transport is a system where the responsibility for transport activities is placed on one operator.

Hence, a multimodal transport operator (MTO) acts as a principal and accepts whole responsibility and liability to perform the transportation contract; and thus becomes the sole interface point for the shipper’s transport function. Typically, if merchandise is moving within India from Rohtak in Haryana to Mumbai, it may be sent by road from Rohtak to Delhi and by rail from Delhi to Mumbai. During the whole process, a road transporter and a rail operator is involved and the shipper has to coordinate with both operators for the cargo to reach its destination. Whereas, in a multimodal transport, a MTO single handedly arranges for the consignment to reach its destination by furnishing a single bill to the shipper rather than providing multiple bills.


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