Multimodal Transport
Multimodal Transport
Multimodal Transport
Transport
Professor: Mukesh Parikh
1/1
Processed Goods
Medium usage of third
• Medium FOB Value
Party logistics services
• Medium Logistics Cost Sensitivity
Manufactured
Maximum use of third
• High FOB Value
Party logistics services
• Low Logistics Cost Sensitivity
Intermodal and Multimodal Transport
Liner trade
Operated by shipping
services in joint
agreements / liner
conferences on fixed
routes. 1968 – The first
specialized cellular
General cargo ships with container ship was
multiple cargo storage 1966 – The first delivered. Containers
sections. Transatlantic became of standard
Long period of port stay container service size – 20’ and 40’
between the US helping extensive use of
Introduction of east coast and Container ships
containers in maritime
unitization: pre-slinging, 1956 – Ideal X Northern Europe and inland transport First generation
palletization First container resulted in long Second generation
ship launched by distance Third generation
Malcom McLean container trades
Fourth generation
Fifth generation
Intermodal and Multimodal Transport
Intermodal Multimodal
• Different means of cargo transportation to • Different means of cargo transportation to
determine the best transportation route while determine the best transportation route while
finalizing transport carriers in order to ensure door finalizing transport carriers in order to ensure door
to door services. to door services.
• Suppliers / receivers sign up different contracts • Suppliers / receivers sign up different a single
throughout the journey of cargo for air, water and contract covering the journey of cargo by air.
land modes. water and land.
• Multiple contracts with different transporters help • The Multi-modal Transport Operator (MTO) takes
in negotiating leaving the choice of transport all the responsibilities on the single point basis,
mode and carrier with the shipper / receiver. The though he may utilize multiple transport agencies
cargo interests retain the control over each leg of covering separate legs.
transport chain. • Multimodal Transport system reduces paperwork
• Intermodal offers a cost-effective solution for the and saves time of the cargo interests, leaving them
transport need of cargo interests to focus on their core business.
• Usually intermodal system is adopted by shippers • Shippers of high value / container cargo prefer to
of low value / high logistics cost sensitive cargoes. use the multimodal transport system.
Intermodal and Multimodal Transport
Intermodal Multimodal
• Let us evaluate the supply chain of Non coking coal for • Compare the intermodal services with exporters of
power generation (thermal coal) which is imported. ready made garments exporting fashion garments in
• Raw material is Thermal Coal containers.
• Suppliers can be located in Australia, Indonesia, South • For this exporter, the most important service attributes
Africa, Russia, USA. are frequency of service, transit time, reliability of
• Due to a large volume of requirement and low value of service, seamless customs documentation and the
cargo, the landed cost needs to be tightly controlled. foremost aspect is getting negotiable document in hand
for getting money from the banks. This is available to
• Customer (Power plant) has to deliver electric power to
him as a Multimodal Transport Document (MTD) issued
the end consumers at competitive rate as committed in
by a licensed MTO.
the power purchase agreement with the government.
• Additional features cover the aspect of visibility /
• Power plant as the customer in the coal supply chain will
tracking of shipment throughout the supply chain. Both
negotiate individually with every service provider in the
the shipper and receiver are able to track the status of
chain – supplier, shipping company, ports, handling
their shipment on real time basis which helps them
contractors, CHAs, surveyors, road and rail transporters
effective inventory management.
for each component of intermodal services to get the
best rates • Shippers with high value shipments show high sensitivity
for quality of services and prepared to pay a premium
for this
Demand for Transportation Management System (TMS) capable of Global Multimodal operations is rising
Liner Terms and Tramp terms
• FIO: Cost and time on cargo owner’s account both ends
• FILO: Cost and time on cargo owner’s account at load port
Cost and time on ship owner’s account at discharge port
• LIFO: Cost and time on ship owner’s account at load port
Cost and time on cargo owner’s account at discharge port
• Full Liner: Cost and time on ship owner’s account both ends
Tramp terms are first three. Liner terms are the last line
Intermodal and Multimodal Transport
Source: investindia
Multimodal transport in India
IT has been a major enabler of multimodal transport in India
and has been extensively used to automate the supply chain
and documentation. For shipments coming into India,
documentation starts at the ports, CFSs, ICDs and then final
custom clearances before delivery. For shipments moving out
of India, documentation starts from the storage point till the
time it exits the port. To automate this process, Customs has
introduced the Indian Customs EDI System (ICES) which
provides a paperless seamless system to exchange/transact
custom clearance related information using Electronic Data
Interchange (EDI). ICES is currently operational at 134 major
custom locations across India which handle more than 98% of
India’s international trade of import and export.
Source: investindia
Multimodal transport in India
Source: investindia
Multimodal transport in India
Completion of the Dedicated Freight Corridors (DFCs)
will also enhance the share of rail freight in the
country from the current 30% to around 60-70% as in
developed countries. In Varanasi, a freight village is
being developed along the river to enhance the
potential of Eastern DFC and to augment traffic
capacity along the National Waterway 1. Inland
waterways cargo movement has already started from
NW-1 by PepsiCo, Dabur, Emami, IFFCO from Kolkata
to Varanasi where a freight village is being developed
to connect it to the eastern DFC. The world’s largest
container company Maersk Line has also started the
movement of goods on that route. True examples of
Multimodal transport are being seen in Northeast
where cargo is being transported to Guwahati
through trucks, from where air cargo is being used to
transport fresh produce to the Middle East and other
countries. Cargo is also being transported through
Kandla port in the west via western DFC, aggregated
in Palwal and then distributed via road to
U.P, Punjab and Haryana.
Source: investindia
Multimodal transport in India
Source: investindia
Multimodal transport in India
CURRENT SCENARIO
• India’s logistics sector employs nearly 22 Mn people.
• The Indian logistics sector was valued at USD 215 Bn in 2021 and is
expected to grow at CAGR 10.7% during 2021-2026.
• India’s logistics sector is estimated to account for about 13-14 % of GDP.
• Demand for warehousing stock to increase from 265 mn sq ft (2021) to 500
mn sq ft (2030)
• The stock of cold storage is expected to rise to 41 Mn sq. ft. (2023) from
the current 36 Mn sq. ft
• The government aims to trim the cost of logistics from the current 13-14%
of GDP to 8-9% of the GDP by 2030
Multimodal transport in India
Bharatmala Pariyojana
• Indian Govt. to build 66,000 Km of roads, highways, greenfield
expressways and bridges, with an investment of ~USD 84 Bn
• Will improve road connectivity & speed of road transport 1st phase
involves construction of ~35,000 Km highways by 2022
Multimodal Logistics Parks
• Govt. has planned 35 MMLPs with an investment outlay of ~USD 6.2 Bn
• These parks will lease space to private companies to run central
operations and save on warehousing costs
• They will act as freight aggregation and distribution hubs, and enable
long haul freight movement to reduce transport costs
Source: investindia
Multimodal transport in India
Dedicated Freight Corridors (DFC)
• DFC is India’s largest infrastructure project, worth USD 9.85 Bn and spread
across 3,360 km
• ~80% of rail freight is expected to shift to DFC, freeing up capacity of Indian
Railways
• DFC will aid in decongestion of highways, as one freight train will be able to
carry load equivalent to 1,300 trucks
Sagarmala and Inland waterways
• Sagarmala is a flagship programme to promote Port-led development,
designed to harness India’s 7,500 km coastline
• 800+ projects with an estimated investment of more than USD 66.2 Bn
have been identified
• 111 inland waterway channels have been declared as National Waterways
Source: investindia
Multimodal transport in India
Source: investindia
Multimodal transport in India
Source: investindia
Multimodal transport in India – Multimodal logistics parks
Source: investindia
Association of Multimodal Transport Operators India
• https://talkinglogistics.com/2015/10/12/global-multimodal-
transportation-is-not-a-do-it-yourself-operation-the-important-link-
between-shippers-freight-forwarders-and-tms/
• https://www.supplychainquarterly.com/articles/1401-making-the-
journey-to-a-multimodal-segmented-supply-chain
• https://www.researchgate.net/publication/326235495_Multimodal_t
ransport_system_effect_on_logistics_responsive_performance_Appli
cation_of_ordinal_logistic_regression
Intermodal and Multimodal Transport
• https://www.redwoodlogistics.com/what-is-multimodal-transport-
breaking-down-the-facts-and-fiction/
• https://www.shipag.com/blog/2017/08/intermodal-versus-
multimodal-whats-difference-and-which-should-you-select/
• https://www.macandrews.com/intermodal-vs-multimodal-
difference/?cn-reloaded=1
• https://clearitusa.com/multimodal-vs-intermodal-transportation/
• https://www.shippingandfreightresource.com/difference-between-
intermodal-and-multimodal-transport/
• https://www.easyship.com/blog/4pl-vs-3pl
Multimodal Industry and Major Players
• Rail Freight: Goods are transported predominantly by road and rail in India.
Whereas road transport is controlled by private players, rail transport is
handled by the central government. Rail is preferred because of
containerization facility and ease in transporting ship-containers and
wooden crates. Despite having one of the world's largest rail networks and
recent privatization of the container rail industry, road transportation
continues to grow and gain share from rail- albeit at a slower pace.
• The freight contributes about 65% to the Indian railway’s total revenue.
However the rail share in freight traffic has fallen from 88% in the 1950s to
about 35% in favor of the road sector due to the former’s inherent
disadvantages. Estimate of the modal movement of cargo highlights that In
India nearly 30 % of the cargo is moved by rail.
Multimodal Industry and Major Players
• https://www.consultancy.uk/news/17391/the-25-companies-with-the-best-supply-chain-and-
logistics-practices
Multimodal Transport
Multimodal (combined) Transport is a combination of:
• At least two or more different transport modes
• To move the goods / cargo from
• A place in one country to a place in another country
Multimodal Transport Operator (MTO)
• MTO is a carrier who concludes multimodal transport contracts, the
contracts involving transport by more than one mode of carriage, for
which MTO accepts responsibility and liability as a carrier.
MTO License
• D G Shipping is empowered to issue MTO license in India
Multimodal Transport
Relative Importance of Service and Cost
• Total logistics cost = Inland transport at both ends + Ocean freight
+ Warehousing + Inventory carrying cost + Insurance
• Frequency of service – Ideally daily service
• Transit time – Fastest possible transit
• Reliability of service – For JIT strategy
• Safety and security
Importance of service parameters varies with the seasonal demand, type
and value of cargo
Multimodal Transport
Benefits of Multimodal transport
• A single contract covering all modes of transport under single responsibility
• Saves time and efforts for cargo interests – especially for high value users
• Customers can focus on their priority service points
• Greater safety and security due to a single contract
• Potential reduction of costs as the MTO can exercise volume based bargains
• Simplified tracking process for all consignments
Multimodal Transport
Documents used
• Bill of lading (3 originals) (ocean transport)
• Packing list (3 originals)
• Invoice (3 originals)
• Certificate of Origin (1 original)
• Original Power of attorney
• Phytosanitary certificate
• Phytosanitary import permission
Multimodal Transport
Responsibility of MTO
• MTO is the broker of transport responsible for transfer of goods from
source to destination, under a single contract document.
• MTO uses a combination of several modes of transport comprising of
rail, road (trucks/road tankers), ships, air. Use of different means of
transport is based on the preference and requirements of end
customers ensuring the most efficient and economic route.
Multimodal Transport
Limitation of liability
• According to the Multimodal Transport of Goods Act, 1993; in case of
non-declaration of value by consignor and ignorance as to during
which stage loss or damage occurred, liability shall not exceed 2 SDR
per kg. of gross weight or 666.67 SDR per package or unit whichever
is higher. (Today’s exchange rate is SRD1 = US$1.3689).
• SDR is used for determining liability of sea and air transport.
• Value of SRD is based on basket of five currencies: US Dollar, Euro,
Chinese renminbi, Japanese Yen, British Pound Sterling
Multimodal Transport
The Multimodal Transportation of Goods Act, 1993 (MMTG) provides for
Regulation of Multimodal Transportation of Goods
From
Any place in India to Any place outside India
Involving
Two or more modes of transport
On the basis of
A single multimodal transport contract
Multimodal Transport
• CHAPTER I PRELIMINARY
• SECTIONS 1. Short title, extent and commencement. 2. Definitions.
• CHAPTER II REGULATION OF MULTIMODAL TRANSPORTATION
• 3. No person to carry on business without registration. 4. Registration for
multimodal transportation. 5. Cancellation of registration. 6. Appeal.
• CHAPTER III MULTIMODAL TRANSPORT DOCUMENT
• 7. Issue of multimodal transport document. 8. Multimodal transport
document to be regarded as document of title. 9. Contents of multimodal
transport document. 10. Reservation in the multimodal transport
document. 11. Evidentiary effect of the multimodal transport document.
12. Responsibility of the consignor.
Multimodal Transport
• CHAPTER IV RESPONSIBILITIES AND LIABILITIES OF THE MULTIMODAL
TRANSPORT OPERATOR
• 13. Basis of liability of multimodal transport operator. 14. Limits of liability
when the nature and value of the consignment have not been declared and
stage of transport where loss or damage occurred is not known. 15. Limits
of liability when the nature and value of the consignment have not been
declared and stage of transport where loss or damage occurred is known.
16. Liability of the multimodal transport operator in case of delay in
delivery of goods under certain circumstances. 17. Assessment of
compensation. 18. Loss of right of multimodal transport operator to limit
liability. 19. Limit of liability of multimodal transport operator for total loss
of goods. 20. Notice of loss of or damage to goods. 20A. Period of
responsibility
Multimodal Transport
• CHAPTER V MISCELLANEOUS
• 21. Special provision for dangerous goods. 22. Right of multimodal
transport operator to have lien on goods and documents. 23. General
average. 24. Limitation on action. 25. Jurisdiction for instituting
action. SECTIONS 26. Arbitration. 27. Delegation of power. 28.
Multimodal transport contract to be made in accordance with this
Act. 29. Act of override other enactments. 30. Power to make rules.
31. [Repealed.] 32. Repeal and savings. THE SCHEDULE [Repealed].