Shipping Insurance(Unit - 5) III Year

Unit – 5
Multi-modal transport and the procedures involved
Multimodal Transport
Multimodal Transport is the combination of different means of
transport, in order to facilitate the movement of cargo, i.e. making it faster and
more efficient.
When it comes to this mode of transportation, there is more than one
kind of vehicle necessary to take the goods to their final destination, by the use
of trucks, trains, ships, airplanes or some other mean of transport for the
delivery.
The advantage of Multimodal Transport lies in the most efficient
combination of multiple means of transport, whilst optimizing deadlines,
cutting back on inventory costs, therefore keeping the costs of the
merchandise under control. The combination of these also results in high
environmental sustainability, since Multimodal Transport reduces the
environmental footprint of transportation.
Despite the support of environmentalists and cargo transportation
experts, multimodality might induce certain costs through the use of modal
interfaces, such as transshipments, handling, etc. However, you may hire a
Freight Forwarding Company that provides an interface between the various
types of transport, without getting the Importer or the Exporter involved in
this exchange.
For more complex shipments, or a more thorough exploration of the
quality/price ratio of each part of the transportation, multimodal transport is a
good, often the only, option to consider, especially to/from countries that do
not border on the sea.
Multimodal transport: In today's world, multimodal transport is a basic
element for moving goods from one place to another using different vehicles
so that, the merchandise reaches its destination quickly and safely with a single
transport contract.
Multimodal transport can be domestic or for companies wishing to
move their goods or materials. In global framework, multimodal transport can
be intermodal, where different types of vehicles will be used to transport the

1
 Shipping Insurance(Unit - 5) III Year

load, or combined transport that will use the same chain of vehicles to move
the load.
History of the multimodal transport
Multimodal transport concept is not really new. As early as the 17th
century, a well-known French writer described how his horse-drawn carriage
was placed on a boat and lowered into the Rhone River for 400 kilometers to
avoid the rough roads of the roads of that time. However, modern multimodal
transport was born with railways.
Importance
Multimodal transport implies that, for goods to be transported, it is
necessary to use different means of transport in order to reach their final
destination, which is previously established by contract. This being the case,
the execution of the same shipment may require different transport modes
such as, for example, ship, vehicle or train and all this through a single
contract.
This possibility makes the whole process simpler on a commercial level,
without having to involve intermediaries. This is where the importance of
multimodal transport largely lies.
Another important aspect of multimodal transport is that its means of
transport can be adapted to short or long distances depending on the type of
cargo and its destination. In this sense, there are large or small transports that
can be used in a multimodal transport so that, the merchandise can leave or
arrive at its destination combining land cargo vehicles by road to take the
merchandise from the warehouse to the port, or railway terminal and other
larger ones such as ships or railroads that can transport more cargo over long
distances.
Multimodal transportation of goods involves the use of several modes of
transportation such as rail, ship, and truck. Different means of transport are
used throughout the delivery process to create the most efficient and economic
route for a given set of dispatch and delivery points.
Characteristics of multimodal transport
Among the most common characteristics of multimodal transport we can
mention the following:
1. Two or more types of transport are used to transport a load.
2. The transfer can be at national or international level.

2
 Shipping Insurance(Unit - 5) III Year

3. It is possible to use maritime, air or land transport vehicles combined or of

the same type.
4. You can move materials or goods using a single contract.
5. Distances can be long or short.
6. Cargo tracking through satellite systems.
Advantages of Multimodal Transport:
1. Centralization of responsibility in one transport operator;
2. Use of international experience, in transportation as well as in the field of
bureaucracy and commerce;
3. Economies of scale in transport negotiations;
• Better use of available infrastructure and more efficient means of
transport, focused on cost reduction;
• Reduction of indirect costs (e.g. human resources).
FEATURES OF MULTIMODAL TRANSPORT SYSTEM.
1. Goods mainly in international trade pass through the hands of more than
one carrier and more than one mode of transport.
2. Under conventional system of segmented transport, the consignee enters
into separate contracts with each other.
3. The liability of each carrier is limited to the carrier in limited to the
carriage performed by him.
4. The consignor or his agent has to attend to all arrangements required for
transshipment of goods from one mode to another, including
warehousing.
Advantages of Multi-modal Transport
The advantages of multimodal transport include the following:
1. Reduction of cargo handling and delivery time efficiency
2. Less time and effort.
3. Reduction of costs per vehicle.
4. Decrease in customs controls.
5. Only one contract is made.
6. Tracking cargo through satellite systems.
7. Increased transport security.
8. Easier freight tracking.
9. Low rates of theft or damage to the cargo that favor the costs of
insurance premiums abroad.

3
 Shipping Insurance(Unit - 5) III Year

1. Minimises time loss at trans-shipment points: Multi-modal transport

operator maintains its communication links and coordinates that interchange
onward carriage smoothly at transshipment points.
Multi modal transport operator controls its transmission links and regulates
that intersection forward carriage easily at transshipment points.
2. Provides faster transit of goods: The faster transportation of goods is
made possible under Multi-modal transport reduces the disadvantages of
distance from markets and the typing -up of capital.
The express transport of goods is made feasible under Multi modal transport
which overcomes the limitations of remoteness from markets and the typing-
up of a metropolis.
3. Reduces the burden of documentation and formalities: The burden of
issuing multiple documentation and other formalities connected with each
segment of the transport chain is reduced to a minimum.
4. Saves cost: The savings in money from cost resulting from these
advantages are usually reflected through freight rates charged by the Multi-
modal transport operator and also in cargo insurance cost.
5. Establishes only one agency to deal with: The consignor needs to deal
with only the multi-modal transport operator in all matters relating to goods,
or delay in delivery of goods at destination.
6. Reduces cost of exports: The inherent advantage of Multimodal
transport system will help to reduce the cost of exports and improve their
competitive position with pricing in the international market segment.
What are the benefits of multimodal transport?
Benefits of multimodal shipping:
Multimodal transport can benefit many businesses that ship large amounts of
freight on a regular basis. The main reason why companies prefer multimodal
is that it requires less time and effort. All the shipments are under a single bill
and are usually managed by an external party. Other than saving money and
time, there are many reasons your company should choose multimodal
transport when planning your next shipment, including:
1. Time savings: Since in multimodal transportation one shipping provider
handles the entire process, you’ll only have to communicate and get a
report from one company. This ensures less worrying about the shipment,
and faster transit times, which eventually result in higher productivity.

4
 Shipping Insurance(Unit - 5) III Year

2. Cost-efficiency: It may seem like picking carriers with the lowest price is
definitely a more profitable option. However, the lowest price is not always
the greatest deal. Intermodal transport involves not only different contracts
and carriers but also multiple shipment insurances. A much easier logistics
coordination within multimodal can help you save a significant amount of
money on transportation.
3. Less worrying: When a single carrier handles your freight from door to
door, it ensures easier communication and efficient tracking. It delegates a
larger piece of responsibility and liability to the company coordinating your
logistics.
4. Easier Communication: When companies ship through multimodal
transportation, they handle all shipping updates, delays and interactions
through one provider and contract. This gives shippers ease of mind and
simplifies the process of communicating between different contacts and
carriers. Essentially, when you have one person responsible for the entire
transportation chain, it’s much easier to just focus on the business and not
spend time bouncing from one call to another.
5. Faster Transit Options: Due to new restrictions on truck drivers on driving
hours and other regulations, some longer haul shipments are not as fast as
they once were. The combination of different transportation modes under
one contract lets you have a piece of mind and balance transit time. That
way, you avoid drivers driving too long and therefore bypass shipping
delays. Giving companies more options for their shipment gives you control
and flexibility over the loading and unloading process.
Ultimately, multimodal transport helps guarantee consumers on-time
deliveries and true cost savings. Whether you are shipping by air, rail or barge,
multimodal shipping can be a solution for you.
Disadvantages of Multi-modal Transport
Inter modal cargo transport also yields from relatively high foundation
costs.
Among the disadvantages of this service, the following can be identified:
1. Some countries do not have adequate infrastructure for multimodal
transport development.
2. There may be drawbacks between the changes of transport due to lack of
coordination among transporters and this may delay shipment.

5
 Shipping Insurance(Unit - 5) III Year

3. There is no international regulation ratified by all countries, and this can

produce legal conflicts at the moment of moving the merchandise in
international spaces.
Lack of reliability: Because of its dependence on more than one mode of
transportation, inter-modal transportation is also subjected to decrease overall
reliability. As the chain of different forms grows, the probability of any
connection in the chain collapsing down also progresses.
Types of multimodal transport
Among the most used types of multimodal transports we can mention:
1. Short sea shipping: This type of multimodal transport occurs because large
cargo ships cannot receive goods in all small ports. In this sense, it is
necessary that the goods are transported in cargo minibuses so that, they
can arrive from an oceanic port to a small port. This type of ship is called a
sheep feeder or “feeder”. In this type of transport, multi-modality includes
the transfer of mini-ships to large ships.
2. Land transport (road/rail): This class includes the transfer of cargo between
two types of transport, in this case road transport to reach warehouses or
distribution centers, and rail for transport over long distances faster and
without the obstacles of land traffic.
When to choose multimodal transport
Multimodal transport can represent a series of benefits in the
optimization of merchandise shipment. But you must know the moment to
resort to it.
As we’ve mentioned in another article, Brazil has, between exporters
and importers, more than 50 thousand companies, if we consider the
economic groups. A big part of them transports its cargo by the maritime
modal, due to it being safer and cheaper than other modals such as by air.
In a situation of transport in short distances, or in regions that are extremely
easy to access, there is no need for multimodality. In spite of it being highly
efficient, multimodal is only profitable when the costs of using modal
interfaces get to a competitive level. That is, when the operation is bigger or
more complex.
“The first analysis to opt for using multimodality in Brazil is the
geographical analysis of the demands for transport and if we have access to
multimodality. Taking into consideration that we do have access, the first

6
 Shipping Insurance(Unit - 5) III Year

decision is cost reduction and, consequently, the increase of the product’s

competitiveness”, states the manager.
If you observe an advantageous scenario of time, cost, and distances to
be traveled, it might be the time to embark on multimodal transport.
Multimodal Transport System
The multimodal transportation system has the same style of the
transportation process. But, this system is more frequently used in freight
transportation than public transport. However, each transportation service
provider has the same bill of lading or the contract. The responsibility of the
product from the origin to the end customer falls under one single carrier
company. Under this concept, a service provider should have all modes of
transportation. Upon receiving a project or contract, the service provider will
come up with a combination of different transportation based on the route of
the passenger and type of product. Once the customer approves the process, a
contract is made that covers the entire process.
It has the same applications like intermodal transport. While handling
people with multimodal transportation (mixed-mode commuting), the system
aims to reduce the dependence of personal automobiles during the
commutation, making public transportation easier to schedule any journey. For
instance, regional rail would provide rapid transit at a low cost. Once the
passenger reaches a suburb station, quick transit to an inner area needs road
transportation like a bus.
With the help of multimodal transport systems, unified public
transportation can become possible by linking several modes of public
transports like buses, light rail, and metro. Such a mass transit can help to
create sustainable urban mobility.
Intermodal Transport System
As the name indicates, it is a transportation system connecting two or
more modes. Under this system, goods transportation takes place in an
intermodal container or loading unit, which passes through several modes of
transportation (ocean freight, truck, rail, etc.).
Once the product reaches a specific geographical area, trucks deliver the
product to a common collection area. From there, similar vehicles or smaller
transportation deliver the product to the end customer. The entire
transportation process comes under the control of a different carrier or

7
 Shipping Insurance(Unit - 5) III Year

transportation service provider under different contracts. This model includes

airport rail-road link transportation, airport ferry connection, allowing
automobiles on trains, train to ferry connections, and so on.
In the case of urban public transport, intermodal transport is used to
reduce the use of individual automobiles and promote the utilization of public
transport. Several intermodal journey planners such as Rome2rio and Google
Transit have taken the initiative to help travelers schedule their journey.
Intermodal transport focuses on providing a blend of one type of rapid transit
like the regional rail to low-speed options such as buses, trams, or bicycles. The
latter is either appended at the beginning of the journey, or towards the end.
Thus, trains provide a quick transit over long distances, such as from suburbs
to urban areas, from where the passengers can choose the second option to
travel within the city. For example, people can use trains or airplanes to cover
long distances, and then pick a bus, taxi, or tram to travel from the airport to
the in-city destination.
In places with dense populations and high demand for public transport
networks, the intermodal transport system could be a reliable solution. By
using mobility-as-a-service, it is easier to provide a digital solution to public
transportation, including intermodal route planning, ticket mobility, sharing
transportation, and others. Intermodal mobility allows packaging services from
different types of public operators to create a holistic platform for booking,
planning, and traveling. The best example of the intermodal passenger
transportation is the feeder buses.
Advantages
Intermodal freight transportation gives you flexibility with how you want
to move your freight. Additionally, you have the opportunity to be creative in
finding the most efficient way to move your freight. Generally, this process
involves at least two modes of transportation. The more efficiently you plan,
the more money you will save.
Supply Chain
A supply chain is defined as three or more organizations that are directly
linked upstream or downstream in the flow of products or services as they
move from the source to the customer. Intermodal freight transportation plays
a major role in enabling organizations in a supply chain to respond to market
changes by providing them with options. Organizations within a supply chain

8
 Shipping Insurance(Unit - 5) III Year

use intermodal freight transportation to cooperate and assist each other in

maximizing profits. This cooperation is achieved by sharing information and
communicating their needs to each other.
Intermodal transportation
Intermodal transportation is a combination of two or more modes of
transport in order to move cargo from a place in a country to another place to
a different country. The main characteristic of intermodal transport and the
biggest difference to multimodal transport is that every part of the process it is
contracted with a different provider.
Let us use an example that includes rail, truck and ship! Someone
(maybe you) wants to move cargo from Munich to Singapore. In the beginning,
a truck (hired by you) would bring you an empty container to pick up the cargo.
Once you fully loaded the container with freight in Munich, the truck takes the
container to a railroad yard to move your container to Hamburg. It is then put
on a container ship; your carrier takes on full responsibility until your shipment
reaches Singapore. At the destination, a truck (also hired by you) picks up your
container from the container terminal and delivers your cargo to you (the
consignee) where the containers are unloaded. In this case, it is an Intermodal
Operation as it involves several contracts, between different transport service
providers (truck, rail, sea) and between the buyer and seller.
With Intermodal transportation, you can choose carriers on your own
and leverage the lowest possible rates for each transport. It gives you better
access to equipment and good control over transit schedules capacities.
Looking at sustainability you can even choose environmentally friendly options
to reduce CO2 emissions. Intermodal increases your flexibility, especially with
handling, loading and unloading cargo at different ports.
When doing intermodal transportation, it is easy to chase the best terms
separately with each company. However, this means more overhead for
shippers, as they need to keep track of several contracts with different
providers. The shipper is also responsible for handling the coordination of
delays, as one company will not be aware of the delays that another company
might be having.
Advantages of Intermodal Transportation
Intermodal transportation is favored throughout the world as it offers
environmental benefits such as reduced CO2, particulate matter, and N2O

9
 Shipping Insurance(Unit - 5) III Year

emissions, and lower diesel fuel consumption during this era of rapidly
depleting natural resources.
Intermodal transportation allows for route changes and reduces
highway use. There are many significant advantages to intermodal transport:
less noise pollution; more reliable delivery time notifications; elimination of
traffic and customs processes on the highway; leaner planning processes; fixed
departure schedules; higher quality service standards; and easier planning and
support for large-scale.
Top Benefits of Intermodal
1. Lower Cost Alternative to Truckload
2. Sustainability
3. Increased Level of Security
4. Reduces Highway Congestion
5. Reliable Capacity
6. Optimizes the Efficiency of Truck and Rail
7. Improves Safety
8. Easy to Monitor
1) Scalable and flexible: Many companies lack the ability to scale logistical
operations in response to varying demands throughout the year. Those
utilizing an intermodal framework, rarely struggle with this issue. A single
train has the ability to move the load of 280 trucks. This translates to the
equivalent of having an entire fleet at your disposal, plus North America’s
comprehensive rail network makes it possible to send shipments cross
country, and everywhere in between, with ease.
2) Time efficient: Railroad shipping schedules and transit times have improved
significantly. Twenty years ago shipping via intermodal coast to coast used
to take two-weeks. Now it’s only about seven to eight days. Not only that,
intermodal moves goods from point A to point B with less distractions and
delays from traffic patterns, weigh stations, and other issues related to
trucking.
3) Cost effective: Intermodal is about 2-3 times more fuel efficient than OTR
(over the road) transportation. Since a single intermodal train can transport
the equivalent of 280 truckloads, it offers higher fuel efficiency. Trains can
also carry greater loads, because containers can be double-stacked,
resulting in overall increased productivity. A freight train can move a ton of

10
 Shipping Insurance(Unit - 5) III Year

freight about 430-500 miles on a single gallon of diesel fuel. This increased
fuel and freight efficiency helps shippers save 15-20% on shipping costs,
especially for distances exceeding 800 miles. This is where intermodal rates
are far cheaper than shipping via truck. However, shorter routes often
make more sense as over-the-road moves.
Another cost effective benefit of intermodal is that container fees are
minimal in comparison to that of full truckload. This makes it an excellent
choice when you need to make additional space on your dock or prepare
and load a shipment over the course of several days.
4) Environmentally friendly: If your goal is to improve your carbon footprint,
intermodal is an excellent choice to consider. Intermodal rail is fuel efficient
and very environmentally-friendly compared to OTR transportation.
According to the Environmental Protection Agency (EPA), replacing OTR
with intermodal transportation for shipments exceeding 1,000 miles
reduces greenhouse gas emissions by sixty-five percent. Statistically,
railroads are also considered to be a safer mode of transportation for
hazardous material. According to the EPA, trucks have approximately 16
times more hazmat releases than railroads. Efficient use of fuel means less
greenhouse gas and carbon pollution, plus less hazmat spills, means that
intermodal definitely offers environmental benefits over trucking.
If your shipping partner is certified under the EPA’s Smart Way program
they can better guide you to the most environmentally-friendly carriers and
methods of shipping.
5) Optimizes driver capacity: Since 2015 there’s been a growing shortage of
drivers in the trucking industry. This is attributed to a rising number of
retirees and reduced number of new recruits. Regulations limiting the
number of hours drivers can be on the road, plus other recent safety
regulations, have worsened the crunch. Rising costs, partially attributed to
higher rates paid to attract new drivers, has made OTR transport more
expensive and intermodal more attractive and cost efficient. Since the
driver shortage has been especially significant for long-distance road hauls,
it’s an advantage that intermodal utilizes the greater capacity of local
truckers.
6) Improves safety and reduces risks: Shipping via rail is considered to be
much safer than other methods. Railroad police continually monitor

11
 Shipping Insurance(Unit - 5) III Year

intermodal transportation plus it’s possible for shippers to place GPS

trackers in rail cars to decrease the chances of losing shipments.
Since long distances are usually handled by rail in intermodal, shippers have
far less exposure to roadway collisions and fatalities. This results in higher
freight reliability that translates into smoother, more efficient operations.
The use of standardized freight containers for intermodal means they’re
easily transferred from one mode to the next. This eliminates the risks of
damages and loss from directly handling shipments.
7) Data collection and monitoring is easy: What used to be one of the biggest
drawbacks of intermodal is no longer a challenge. It used to be difficult to
monitor, collect, and assess data relating to a shipment traveling via
intermodal because it uses a combination of different modes and carriers
with separate tracking platforms. Now that there’s a cloud-networked
platform, used by all involved carriers, these processes are more efficient
and effective.

Disadvantages of Intermodal Transportation

Today, people looking to ship goods (or move people) are likely to realize that
it doesn't always make sense to stick to just one mode of transportation. For
example, cargo may be offloaded from a ship onto a truck, which transfers it to
a rail yard, from which it will be moved across the country by train. Intermodal
transportation may be more efficient and cheaper; in some cases, however, it
does have pronounced disadvantages in terms of speed and reliability.
Intermodal freight transportation may be costly depending on the number of
modes of transportation. Some downfalls to intermodal freight transportation
involve the high costs that are associated with moving freight by using several
types of modes of transportation. Lack of communication and idle time of
equipment will increase transportation costs. Similarly, equipment that moves
from one location to another empty also adds to the costs.
1. Speed: Although intermodal transportation offers the benefit of
relatively low costs compared to other methods, it obtains this by sacrificing
speed; any time cargo is transferred to a comparatively slower means of travel,
for example trains, which operate on fixed rails that may not offer as direct
route as the roads a truck uses, it slows down. To operate at peak efficiency,

12
 Shipping Insurance(Unit - 5) III Year

intermodal transportation must also reduce the amount of time spent waiting
in depots for a new carrier to arrive or for cargo to be unloaded.
2. Lack of Reliability: Because of its reliance on more than one mode of
transit, intermodal transportation is also subject to lower overall reliability; as
the chain of different modes grows, the possibility of any link in the chain
breaking down also increases. This is particularly problematic when one of the
modes of transport is rail; railroads are more susceptible to delays introduced
by bad weather or equipment failure. For this reason, as well as concerns over
speed, shippers that require reliable, high-speed transportation are less likely
to consider intermodal systems.
3. Damage: Whenever cargo has to be shuffled around, shippers risk the
possibility of damage as the freight is transferred from one method of
transportation to another. Fortunately, this danger can be mitigated, but doing
so generally involves over packing by adding more bracing and protective
material than would normally be deemed sufficient. This added weight and
expense partially counteracts the advantages intermodal transportation has in
terms of energy efficiency and cost.
4. High Infrastructure Costs: Intermodal freight transportation also suffers
from comparatively high infrastructure costs. Containerization has lowered the
cost and difficulty of transporting goods by standardizing their form; shippers
can easily move the same container from a ship to a train to a truck. Handling
these containers, however, requires that shippers have the heavy-duty cranes
and equipment necessary to manipulate large containers; this infrastructure
may not exist in all places, particularly in developing countries.

Is Multimodal or Intermodal better for you?

If you choose multimodal transport, it means that you sign a contract with
only one carrier that covers the entire journey of their shipment, regardless of
the number of transport modes involved. The contracted carrier issues a
Combined Transport Bill of Lading or a Multimodal Bill of Lading.
The advantages include:
a) The ability of the shipper to hold one carrier liable for the movement of
their freight.
b) One contact for tracking a shipment.
c) One responsible entity for meeting delivery requirements.

13
 Shipping Insurance(Unit - 5) III Year

With intermodal transportation, you sign multiple contracts – one with a

freight forwarder or ocean carrier, one or more with a trucking company, and
one or more for rail transportation. Each carrier issues a separate Bill of Lading
in intermodal shipping.
The advantages include:
a) The ability to select carriers for each leg of the shipment based on price or
service.
b) Being able to stop the shipment at any point for any reason.
c) More flexibility in carrier selection when equipment or space issues arise.
Both Intermodal and Multimodal transport have their own advantages and
disadvantages with only one thing that sets the two transport modes apart: For
Multimodal you sign only one contract, for Intermodal more than one. The two
modes of transport optimize delivery times, reduce inventory costs and keep
the level of freight costs under control. However, many people tend to lean
towards multimodal transportation because it can provide shippers with a
timelier, cost-saving shipping resource. Multimodal freight can also be easier
to manage since it is through a single contract, unlike intermodal that is
covered by various contracts. Intermodal shipping can provide shippers with
lower costs and more predictable pricing, but obviously needs more effort to
control and manage.

What is the Difference Between Intermodal And Multimodal Transportation?

1. Contract: Intermodal transportation sees each mode of transportation as a
different contract. On the other hand, multimodal transportation maintains
higher efficiency as the entire process comes under the monitoring radar of
one single carrier. Thus, under intermodal, the product or container’s
responsibility moves from one hand to other, making it challenging to
maintain strict control over quality. On the other hand, multimodal has the
advantage of keeping the freight under control. Creating a unified ticketing
system is more accessible with multimodal transportation. However, the
passengers have to take care of individual ticket purchases for each stage of
transit.
2. Flexibility: Intermodal transportation allows the passenger or carrier
contractor to choose the best of each mode of transportation. For instance,
he can choose the fastest ferry service to save hours in transit and

14
 Shipping Insurance(Unit - 5) III Year

comfortable road transportation over public transportation. In multimodal

transportation, the entire process is the choice or model provided to the
contractor or passenger based on the service provider’s model.
3. Delay and Overhead: In terms of overhead and delay, the contractor should
keep track of every delay and complications, in each transportation mode.
For instance, if an individual is traveling from airport to a remote region, he
has to take into account the delay in train arrival, match it up with boarding
public road transportation, and so on. One mode of transportation will not
have complete information about the complications and delays in another,
which leads to incoherence in intermodal transport. However, in terms of
multimodal, the entire process is under the control of one service provider,
which gives ease to the contractor or service user.
4. Cost: Intermodal transportation deals with a new contract for every mode
of transportation, which increases the overall cost of transportation for the
contractor or passengers. In the case of multimodal transportation, the
operation cost of setting up such a service is high, but the overall package
for the user can be cost-efficient than intermodal. Multimodal
transportation gives better routing efficiency than intermodal
transportation.
5. Government Regulation: In case of both the origin and destination located
in the same country, there isn’t a considerable difference in regulations of
intermodal and multimodal transportation. Let’s say both points (origin and
destination) are on different continents, the shipment company has to
create a contract that covers the regulations of both the governments.
While dealing with international transportation, the regulations ratified
on the process by each country is different. This difference increases the
complexity of the contract of multimodal transportation. Some countries
do not have the infrastructure to implement multimodal transportation. In
such cases, intermodal transportation is the best option.
6. Reliability / Insurance / Claims: At each node, the carrier provides a
contract of lading, which shifts the responsibility of the cargo or
transportation to the next service provider, in the case of intermodal
transportation. Thus, during cargo claimants, the process can become
complicated and tangled into webs of conditions. The claim process can
vary based on the type of bill of lading provided by each carrier service

15
 Shipping Insurance(Unit - 5) III Year

provider. Depending upon the contractual conditions and agreements, the

claimant’s position will vary. In the case of multimodal transportation, one
contract stands valid, and the service provider is claimable in case of any
misfortunate events.
7. Insurance: In the case of multimodal transportation, single umbrella
insurance covers every mode of transportation. The intermodal
transportation increases the overall cost of operation by requiring different
types of insurance for each contract. However, this individual insurance can
provide better safety and security of transportation for those transporting
fragile or perishable products. The overall insurance concept is quite
applicable while choosing multimodal public transportation for an area or
city.
8. Speed vs. Cost: Multimodal transportation and intermodal transportation
are both efficient in terms of speed and value when compared to
conventional trucking logistics. However, in an in-depth analysis of
intermodal v/s multimodal concepts, multimodal transportation is the best
when commuters put more emphasis on speed than the cost of
transportation. This reason is why multimodal transportation is the best
replacement for the public transportation system. In terms of intermodal
transportation, it is cost-efficient, but the pressure and complexity of
intermodal routing and creating a combination of transportation modes fall
on the head of the contractor or traveler, which can become a daunting
process if used daily.

Multi-modal Transportation of Goods

ACT, 1993 & MULTIMODAL TRANSPORT DOCUMENT (MTD) AND HIS IMPLEMENTATION IN
INDIA
Multimodal Transportation.
1. The Multimodal Transportation of Goods Act, 1993 (MMTG) provides
for the 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. This act came into force
from 2.4.1993 and it provides for Registration of a person a Multimodal
Transport operator and Multimodal Transportation can be carried out only by
persons registered as MTO under MMTG Act, 1993. The Director General of

16
 Shipping Insurance(Unit - 5) III Year

Shipping has been notified as the competent authority to perform functions

under the Act including registration of MTOs. The MTO registration is valid for
period of 1 year and may be renewed for further period of one year from time
to time. The Director General of Shipping has, after obtaining the prior
approval of Ministry of Surface Transport, prescribed the Multimodal
Transport Document under Rule 3 of Multimodal Transport Document Rules,
1994.
2. The Multimodal Transportation of Goods Act, 1993 was introduced to
facilitate the exporters and give them a sense of security in transporting their
goods. The concept of door to door delivery, which is MULTIMODAL
Transportation is all about, is catching up fast in international trade. Reduction
of logistics costs is one of the important aspects of Multimodal Transportation,
thereby reducing the overall cost to the exporter and making his products
more competitive in the international market. It is in this context that the
Government of India thought it necessary to codify the rules and regulations
governing Multimodal Transportation and enacted the Multimodal
Transportation of Goods Act, 1993 based on the UNCTAD/ICC rules which have
gained widespread acceptance. The Multimodal Transportation Act lays down
the standard terms and conditions governing this activity. Under the provision
of the Act only those companies who are registered by the competent
authority which has been notified to be the Director General of Shipping, can
carry out Multimodal Transportation. This requirement of registration has
been imposed by the government to ensure that only such companies which
have the necessary expertise infrastructure and financial capability are allowed
to undertake Multimodal Transportation so that the interests of shippers are
fully protected.
3. As per the MMTG Act three categories of companies are eligible to be
registered as MTO's. They are
a) shipping Companies
b) Freight Forwarding Companies
c) Companies which do not fall in either of the above two categories. In the
case of Shipping Companies (which own and operate vessels) as well as
Freight Forwarding Companies the turnover of the last three years
should bed Rs. 50 lakhs or more to make them eligible for registration as
MTO.

17
 Shipping Insurance(Unit - 5) III Year

In the case of a company falling under third category above, the Subscribed
share Capital of the company should be Rs.50 lakhs or more. In addition the
applicant company should satisfy the following:
a. Submit a certificate of turnover duly signed and issued by a Chartered
Accountant within the meaning of C. A. Act, 1949.
b. Have offices/agents/representative in at least two other countries.

Multimodal Transport Document and its

implementation in India -
1. The business environment is moving faster than ever before.
Increased competition at home and abroad means quality as well as
profitability must be preserved. We live in a constantly evolving world where
harmonization is extremely important and the trade desperately requires an
efficient and simple door to door liability system. This was one of the reasons
why ICC and UNCTAD developed the new UNCTAD/ICC Rules for Multimodal
Transport Documents.
2. Increased containerization has resulted in Multimodal Transport of
Goods under a single transport document covering all modes of transport from
the exporter’s premises to the consignee's premises such Multimodal
Transportation under a single document has a number of advantages like
reduction in overall transport cost reduction in delays, smoother and quicker
movement of and improvement in quality of services. In India there was no
uniformity followed in respect of MULTIMODAL Transport of goods.
Government felt that absence of uniformity in such practices, leads to
ambiguity and imbalance of interests between the operators and the cargo
owners. A working ground was accordingly, set up to examine the prevalent
situation and to recommend a law which should clearly determine the
responsibilities and liabilities of MULTIMODAL transport operators for loss or
damage. The new law on MULTIMODAL transport was enacted by issue of an
ordinance in October 1992 and was later on replaced by the Multimodal
Transportation of Goods Act 1993.

18
 Shipping Insurance(Unit - 5) III Year

WHAT IS THE MULTIMODAL TRANSPORT DOCUMENT:

With the advent of containers, the ocean carriers started extending their
services to Inland locations, as containers, are smoothly and easily handled
from one mode of transport to another. One of the most important ingredients
involved in such Multimodal Transport is the existence of a legal regime to
govern the terms of the contract and specify the basis of liability and
responsibilities of the Multimodal Transport Operator. Previously, a document
called Combined Transport Document (CTD) was being issued. However,
although the format of the document broadly conformed to a specimen
prescribed by the International Chamber of Commerce (ICC), the CTD has not
been adopted by all operators uniformly. Thus, there was an absence of
uniformity of liability and other condition. In India the Foreign Exchange
Dealers Association of India (FEDAI) has evolved its own rules laying down the
responsibilities and liabilities of Combined Transport Operators from the inland
container depots. However, these rules could not obtain wide acceptance
mainly because the Combined Transport Document evolved by FEDAI did not
confer negotiability and title to the goods and also because such documents
were required to be exchanged for a regular on - board ocean bill of lading at
the port unless the letter of credit specifically permitted the production of a
combined transport Document in place of a regular Bill of Lading. Looking to
the urgent need of Industry and keeping in view the provisions of the
Multimodal Transportation of Goods Act 1993 which is substantially based on
the rules framed by the ICC and also taking into account the provisions of the
UN Convention of 1980 on Multimodal Transportation of Goods, the Director
General of Shipping, with the approval of the Govt., has issued an Order on
17th March, 1994 prescribing a model for the Multimodal Transport Document
(MTD). The document has been prepared for carrying out the provisions of the
Act keeping in view the primary objective of the legislation that the carriers are
there to serve trade and not the other way around.
The Multimodal Transport Document issued under the present law would
be:
i. A contract for the Transportation of Goods by Multimodal Transport.
ii. A negotiable document unless it is marked non-negotiable at the option
of the consignor.

19
 Shipping Insurance(Unit - 5) III Year

iii. A document of title on the basis of which its holder can take delivery of
the goods covered by it.
The concerned parties who would have commercial interest who would be
governed by the document once it is executed would be:
i) The MTO who is the person responsible for the execution of the
Multimodal Transport Contract.
ii) The consignor who places the goods in question with the MTD for
transporting the same and the consignee who is to take delivery at the
destination.
iii) The bankers who would provide the mechanism for documentary credit.
iv) The insurers who insure the goods against loss or damage and the
liability insurers who would cover the MTO's liability under contract.

MTD AS AN INSTRUMENT TO ENFORCE THE PROVISIONS OF THE ACT.

Once the Multimodal Transport Operator executes the Multimodal
Transport Document, he immediately assumes the role of the owner of the
goods, the Principal thereby authorizing the MTO to exercise the rights as that
of the owner for claiming damages etc. and for other purposes, wherever
necessary. The provisions of the Act shall have overriding effect over all other
laws and any contract for MULTIMODAL Transport made in contravention of
the provisions of the Multimodal Transport Act would be null and void. The
issuance of the Multimodal Transport Document confers and imposes on all
interested parties the rights, obligations and defences set out in the act. In
issuing the MTD, the MULTIMODAL transport operator assumes responsibility
for the execution of the contract as well as would be liable for the loss or
damage to goods or delay in delivery as contained in the Multimodal
Transportation of Goods Act 1993.

CONTENTS OF THE MTD - GENERAL NATURE

The document contains, inter-alia, particulars regarding general nature
of goods, the name and principal place of business of MTD, the name of the
consignor, the name of the consignee if specified by the consignor, the place
and date of taking charge of the goods by the MTO, the place of delivery of the
goods, the date or the period of delivery of the goods at the place of delivery,
whether it is negotiable or non-negotiable, the place and date of its issue, etc.

20
 Shipping Insurance(Unit - 5) III Year

In addition, the standard terms and conditions regarding basis of liability of the
MTO for loss or damage, delay etc. have been incorporated in the document.
Relevant particulars contained in the internationally accepted documents
recognized by International Chamber of Commerce have been taken into
consideration while prescribing the document. The MTOs can now issue on a
uniform basis Multimodal Transport Document as a negotiable instrument as
per the Multimodal Transportation of Goods Act, 1993 and the banks will have
no difficulty in discounting the bills when such a document is presented.

STANDARD CONDITIONS GOVERNING MULTIMODAL TRANSPORT

There are 24 main paras with sub-paras laying down the standard
conditions governing Multi Modal Transportation in accordance with the Multi
Modal Transportation of Goods Act 1993. Definitions of relevant terms are
given in para 1 and are in accordance with the Act. Since this is a recent
legislation required to be applied in connection with India's overseas trade and
the consignees would be outside the country, it is necessary to give the
definitions in these standard conditions so that all concerned parties in
different countries are aware of the meaning of various terms as understood
under the Act. The scope of applicability of the document is to be restricted in
accordance with the preamble of the Act and has, therefore, been specified in
the second condition. Similarly, the effect of issuance of the MTD should be
well known to the parties affected by the document as this is an essential part
of the Multimodal Transport contract and therefore, the same has been shown
in the document. The negotiability and the title to the goods has been
incorporated in the standard conditions in accordance with Section 8 of the
Act. Reservations regarding inaccuracies, grounds of suspicion or the absence
of reasonable means of checking have been mentioned in condition 5 and are
in line with Section 10 of the Act. The evidentiary effect of the Multimodal
Transport Document is in accordance with Section 11 of the Act. Guarantee by
the consignor as stipulated in Section 12 has been specified in Condition No.7.
Conditions governing Dangerous Goods, as required in Section 21 of the Act,
have also been incorporated in the standard conditions. Basis of liability and
conditions of liability of the MTO for loss or damage when the stage of
transport where the loss or damage occurred is not known/known have been
covered in Condition Nos. 10, 11 & 12 and are in accordance with

21
 Shipping Insurance(Unit - 5) III Year

corresponding provisions in the Act. Similarly, the liability for delay, which is in
keeping with Section 16 of the Act, has been stated in the standard conditions.
The limits of liability are clearly spelt out in the said conditions. Section 20 of
the Act lays down the conditions relating to notice of loss, damage or delay
and these have been brought out in Condition No. 17. Further, provisions in
respect of liens, limitation of action, jurisdiction, general average clauses, etc.
have been clearly spell out in the document in accordance with corresponding
provisions of the Act. Besides, specifying the applicable provisions of the Act
the document also contains some of the conditions which are necessary to
facilitate smooth transaction of Multimodal Transport. There is a residuary
condition No. 25 relating to arbitration which permits concerned parties to
incorporate suitable provisions by mutual agreement.

STATUS OF THE MTD VIS-SIS PRESENTLY USED CTD

The combined transport document, which is presently being used also
for Multimodal Transportation, is essentially a document of contract for the
carriage of goods for one mode of transport with the facility of inbuilt
documentation for carriage of the same goods by another one or more modes
of transport after the completion of the first mode. It may thus be appreciated
that the CTD used in overseas carriage of goods is basically a commercial
document for inter-modal transportation and a legal document for uni-modal
transportation for each particular mode of transport covered under the CTD.
The CTD facilitates onward movement of cargo by one mode to another mode
on the basis of the original document with suitable endorsements. However, it
is not meeting the requirements of providing a legal regime of uniform liability
on the basis of a single contract of carriage of goods by Multimodal
Transportation. The CTD, therefore will not meet requirements of the
MULTIMODAL Transportation of Goods Act 1993 or even for that matter the
UN Convention on Multimodal Transportation, strictly. The Multimodal
Transport Document Model prescribed by the Govt. of India will not only be a
commercially acceptable and negotiable document but will also be the basis
for a contract of carriage governed by uniform liability regime for Multimodal
Transportation of Goods in International trade besides being a legally tenable
and enforceable instrument.

22
 Shipping Insurance(Unit - 5) III Year

Questions
Ques.1: Why are shippers making intermodal more integral to their logistics
strategies?
Ans: Shippers are using intermodal for a variety of reasons. In many rail
corridors, intermodal provides a much better value proposition than highway.
Rail transportation is often more energy efficient, so "going green" in
intermodal means moving freight costs less.
With the driver shortage, increased fuel prices, and implementation of
new government policies that restrict hours of service on the road, truck
capacity is a challenge. Shippers are always looking for ways to cut costs and
improve service. Today's intermodal products do just that.

Ques.2: What steps should shippers take to implement intermodal in their

logistics strategies?
Ans.: First, analyze the lanes. Shippers need to determine which areas of the
country their loads are coming into and going out of. The longer the haul, the
greater the opportunity for intermodal cost savings.
Next, define and view the rates within those geographic zones—empty miles,
total miles, revenue miles, loaded miles, billed miles, and movement miles—all
relative to the location of the rail ramp pairs. With this information, shippers
can determine where intermodal fits their needs.
Most shippers would say their main criterion for this determination is price.
The rails in many locations, however, provide more consistent service, allowing
shippers to choose rail over truck.
Once shippers determine where intermodal fits into their overall strategy, they
price it and provide a service matrix to their clients. The service matrix offers
shippers a comparative analysis of the available rail lines and trucking options
in their geographic areas. This makes launching the strategy a much smoother
process, with pricing and service laid out in an easy-to-understand format.

Ques.3: What is the business benefit of using intermodal transportation?

Ans.: When rethinking logistics strategies, the primary questions are: "How can
this benefit my business? What is the value proposition?"

23
 Shipping Insurance(Unit - 5) III Year

The benefits of intermodal shipping include:

1. Lower costs: Shippers can take advantage of lower rates, more predictable
pricing, and the flexibility of loading and unloading goods in a dropped
trailer environment, which reduces handling costs.
2. Environmentally friendly: Shippers can significantly reduce their carbon
footprint by going intermodal, because trains only emit approximately 5.4
pounds of carbon dioxide per 100 ton-miles, whereas trucks emit
approximately 19.8 pounds.
3. Reliability, capacity, and safety advantages: Shippers have more access to
equipment and standardized transit schedules. As companies move their
freight to intermodal, there is also the opportunity to streamline their
reverse logistics, providing additional savings.

24