group4 ism multi modal report

8/7/2019 Group4 ISM Multi Modal Report

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2010

Group 4

Gautam Gulati (219)

Keyoor Prashant Diwaker (224)

Monica Virbhan (227)

Upasana Singh (265)Urooj Ansari (266)

Mohit Motwani (270)

Shivansh Sharma (275)

PGDM (International Business) 2009-11

Multi Modal Transport Report


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2International Shipping Management Report

Acknowledgement

A work is never a work of an individual. We owe a sense of gratitude to the

intelligence and co-operation of those people who had been so easy to let us

understand what we needed from time to time for completion of this exclusive project.

We want to express our gratitude towards Prof. M. C. Harbola, (International Shipping

Management), BIMTECH, Greater Noida for giving us an opportunity to do this

project report.

Last but not the least, we would like to forward our gratitude to our friends & other

faculty members who always endured us and stood by us and without whom we couldnot have envisaged the completion of our project.


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Table of Content

S.No. Topic Page No.

1 Executive Summary 4

2 What is Multi-Modal Transport 5

3 Operations in Multi-Modal Transport 7

4 Indian Multi-Modal Transport System 12

5 Issues in Multi-Modal Transport System 16

6 Findings 18

7 Conclusion 19


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Executive Summary

Multimodal Transport can be viewed as the chain that interconnects different links ormodes of transport -air, sea, and land into one complete process that ensures an

efficient and cost-effective door-to-door movement of goods under the responsibility of

a single transport operator, known as a Multimodal Transport Operator (MTO), on

one transport document.Although the concept might not be new, it was developed

with the advent of containerization in the late 1950's. Since then, certain important

developments have influenced the modern development of multimodal transport.

Governmental deregulation of different modes of transport in the late 1970s/early

1980s permitted the various modes to cooperate with one another and to coordinate

their operations in meaningful and innovative ways. Other important developments

include the removal of transport restrictions and the privatization of state-owned

transportenterprises in various parts of the world in the late 1980s.

Methodology

A Secondary data analysis was done by the help of using online resources forgiving the outline of the multimodal transportation in India

Based on the reference notes and news articles we have forecasted the future ofMulti Modal transportation in India and its future advantages to trade as a

whole


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What is Multi-Modal Transport

The movement of goods in one and the same loading unit or road vehicle, which usessuccessively two or more modes of transport without handling the goods themselves

in changing modes.By extension, the term multimodalityhas been used to describe a system of transportwhereby two or more modes of transport are used to transport the same loading unit ortruck in an integrated manner, without loading or unloading, in a [door to door]transport chain.Intermodal transport is also defined as the use of at least two different modes oftransport in an integrated manner in a door-to-door transport chain.

The concepts of "Multi Modalism" have been applied by the freight industry for manyyears to provide the shipper with the most efficient movement of goods for the bestvalue. The same concepts that work for freight have broad applications to all types of

transportation. In its simplest terms, "Multi Modalism" covers all of the issues andactivities, which may affect or involve more than one mode of transportation.


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It has several aspects:

Connections: The convenient, rapid, efficient, and safe transfer of people or goodsfrom one mode to another (including end-point pick-up and delivery) during a singlejourney to provide the highest quality and most comprehensive transportation servicefor its cost.

Choices: The provision of transportation options through the fair and healthycompetition for transportation business between different modes, independently or incombination.

Coordination and Cooperation: Collaboration among transportation organizations

for the purpose of improving transportation services, quality, safety, and economy forall modes or combinations of modes in an environmentally sound manner.

This shows that Multi Modalism is not limited to freight transport. It is the opposite ofUni Modalism. Going Uni Modal is a comfortable way of thinking, but is eitherimpractical (like Inland water transport (IWT) in deserts), expensive (like overlandtrucking) or not environmentally friendly (like single car occupancy in cities).By courtesy of CNC

Multimodal transport implies also related items, such as carefully arrangedconnections, in sites preferably tri- or Quadri-modal, and a layout of connecting siteswhich encourages multimodality. It thus relates to ports, freight villages, hubs,interfaces, etc. Without such interfaces, a transport cannot be multimodal.


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Operations of Multi-Modal Transport

Multimodal Transport System

A multimodal transport system integrates different geographical scales from the global

to the local. With the development of new modal and intermodal infrastructure, urban

regions have a growing accessibility to the international market; several parameters of

regional transportation are transformed, or at least significantly modified. The above

figure represents the regulation of movements of a corridor within a multimodal

transportation system composed of a set of competing hub centres which converges

regional and local transportation networks. Depending on the geographical scale being

considered, the regulation of flows is coordinated at the local level by distribution

centres, commonly composed of a single transport terminal, or at the global level by

articulation points, composed of major transport terminals and related activities.

An articulation point can simultaneously have a modal and intermodal convergence of

functions; particularly if it is the interface between several modes. Its modal function


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relates to its while its intermodal function indicates its level of service. The regional

multimodal network converges at major articulation points allowing linkages with the

international transportation system through a maritime / land interface. Port cities are

the main agent of that function. Containerization has particularly developed the

maritime / land interface. It insures flexibility of shipments and several ports have

opted for this multimodal transportation technology to keep and consolidate theirstatus of hub centre.

DEFINITIONS SPECIFIED IN MULTIMODA TRANSPORT LAW

Multimodal Transportation means carriage of goods, by at least two different modes

of transport under a multimodal transport contract, from the place of acceptance of

goods in India to a place of delivery of the goods outside India.

Multimodal Transport Contractmeans a contract under which a multimodal

transport operator undertakes to perform or procure the performance of multi modal

transportation against payment of freight.

Multimodal Transport Documentmeans a negotiable or non-negotiable document

evidencing a multimodal transport contract and which can be replaced by electronic

data interchange messages permitted by applicable law;

Multimodal Transport Operator means any person who--

(i) Concludes a multimodal transport contract on his own behalf or through another

person acting on his behalf;

(ii) Acts as principal, and not as an agent either of the consignor, or consignee or of

the carrier participating in the multimodal transportation, and who assumes

responsibility for the performance of the said contract; and

Special Drawing Rightsmeans such units of accounts as are determined by the

International Monetary Fund;

Taking Charge means that the goods have been handed over to and accepted for

carriage by the multimodal transport operator;


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MULTIMODAL TRANSPORT DOCUMENTIssue of multimodal transport document

(1) Where the consignor and the multimodal transport operator have entered into a

contract for the multimodal transportation and the multimodal transport operator hastaken charge of the goods, he shall, at the option of the consignor, a negotiable or non-

negotiable multimodal transport document

Provided that the multimodal transport operator shall issue the multimodal transport

document only after obtaining, and during the subsistence of a valid insurance cover

(2) The multimodal transport document shall be signed by the multimodal transport

operator or by a person duly authorized by him

Multimodal transport document to be regarded as document of title

(1) Every consignee named in the negotiable or non-negotiable multimodal transport

document and every endorsee of such document, as the case may be, to whom the

property in the goods mentioned therein shall pass, upon or by reason of such

consignment or endorsement, shall have all the rights and liabilities of the consignor.

(2) Nothing contained in sub-section (1) shall prejudice or affect the right of the

multimodal transport operator to claim freight from the consignor or enforce any

liability of the consignee or endorsee by reason of his being such consignee or

endorsee.

Contents of multimodal transport document

The multimodal transport document shall contain the following particulars, namely:-

(a) The general nature of the goods, the leading marks necessary for identification of

the goods, the character of the goods (including dangerous goods), number of

packages or units and the gross weight and quantity of the goods as declared by the

consignor

(b) Apparent condition of the goods

(c) The name and principal place of business of the multimodal transport operator

(d) The name of the consignor

(e) The name of the consignee (if specified by the consignor)


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(f) The place and date of taking charge of the goods by the multimodal transport

operator

(g) The place of delivery of the goods

(h) The date or the period of delivery of the goods by the MTO as expressly agreedupon between the consignor and the MTO

(i) Whether it is negotiable or non-negotiable

(j) The place and date of its issue

(k) Freight payable by the consignor or the consignee, as the case may be, to be

mentioned only if expressly agreed by both the consignor and the consignee

(l) The signature of the multimodal transport operator or of a person duly authorizedby him

(m) The intended journey route, modes of transport and places of trans-shipment, if

known at the time of its issue

(n) Terms of shipment and a statement that the document has been issued subject to

and in accordance with this act

(o) Any other particular which the parties may agree to insert in the document, if any

such particular is not inconsistent with any law for the time being in force

"Provided that the absence of any of the particulars listed above shall not affect the

legal character of the multimodal transport document".

Reservation in the Multimodal Transport Document

(1)Where the multimodal transport operator or a person acting on his behalf knows,or has reasonable grounds to suspect, that the particulars furnished by theconsignor in the multimodal transport document do not accurately represent thegoods actually taken in charge, or if he has no reasonable means of checking such

particulars, the multimodal transport operator or a person acting on his behalfshall insert in the multimodal transport document a reservation specifying theinaccuracies, if any, the grounds of suspicion or the absence of reasonable meansof checking the particulars.

(2)Where the multimodal transport operator or a person acting on his behalf fails toinsert the reservation in the multimodal transport document relating to theapparent condition of the goods, he shall be deemed to have accepted the goods inapparent good condition.


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Evidentiary effect of the multimodal transport document

(a)The multimodal transport document shall be prima facie evidence of the fact thatthe multimodal transport operator has taken charge of the goods as described inthe document

(b)No proof to the contrary by the multimodal transport operator shall be admissibleif the multimodal transport document is issued in negotiable form and has beentransmitted to the consignee or transferred by the consignee to a third party, if theconsignee or the third party has acted in good faith relying on the description ofthe goods in the document

Responsibility of the consignor

(1)The consignor shall be deemed to have guaranteed to the multimodal transportoperator the adequacy and accuracy, at the time the multimodal transportoperator takes charge of the goods, of the particulars referred to in clauses (a)

and (b) of section 9 as furnished by the consignor for insertion in themultimodal transport document(2)The consignor shall indemnify the multimodal transport operator against loss

resulting from inadequacy or inaccuracy of the particulars referred to in sub-section (1)

(3)The right of the multimodal transport operator under sub-section (2) shall in noway limit his liability under the multimodal transport contract to any personother than the consignor


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Indian Multi-Modal Transport System

Legal Environment

Unfortunately, the harmonization process of the legal environment for multimodal

transport has not yet succeeded. Despite the continued expansion of international

multimodal transport, there is to date no international uniform liability regime in

force. The present regime comprises a complex mix of: international conventions

designed to regulate unimodal carriage (sea, road, rail and air), diverse and often

conflicting regional, sub-regional and national laws and regulations, and standard-

term contracts. While multimodal transport implies the safe and efficient movement

of goods, the absence of international rules governing the successive carriage of goods

resulted in crucial problems in the field of carriers' responsibility and the liability forloss of or damage to the goods occurring in the course of a multimodal transport

operation. Therefore, during the past decades several attempts were made to establish

an international regime to govern this process.

In 1973, a set of rules were created by the International Chamber of Commerce (ICC).

In 1980, the UN Multimodal Transport Convention was signed. Although it allows the

creation of a new entity, called Multimodal Transport Operator (MTO), which could

offer to shippers an optional door-to-door system of liability applying to multimodal

transport document but this convention, has so far received little support. While, the

Convention will come into force, when 30 nations ratify it, up to 2004 only ten nationshad. In 1990, this situation forced commercial parties jointly with UNCTAD to

replace the ICC 1973 Combined Transport Rules by the UNCTAD/ICC Rules for

Multimodal Transport Documents. Although, these rules have become commercial

practices (new FIATA FBL, new BIMCO COMBIDOC, IMMTADOC), they are of a

contractual nature and therefore not a suitable means of achieving international

uniformity. In 1996, the United Nations Commission on International Trade Law

(UNCITRAL) initiated an international effort to come up with a comprehensive

international convention on multimodal transport that would be ratified and adopted

into law by a majority of nations. At its thirty-fourth session, in 2001, the

Commission established a Working Group and entrusted it with the task of preparing

legislative instrument on issues relating to the international carriage of goods such as

the scope of application, the period of responsibility of the carrier, obligations of the

carrier, liability of the carrier, obligations of the shipper and transport documents.

Recently, the Working Group began consideration of a Draft Instrument on Transport

Law to apply to multimodal transport involving a sea leg. Clearly, this is an issue of


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utmost importance and requires attention by all entities interested in facilitating global

trade.

Regulations

Indias 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

(section 2 (k)). The Act also includes provisions for regulation and conditions for

registration of the MTOs.101

Definitions:

The list of definitions provided in section 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 (section 2 (l)).

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 theconsignor, are mainly derived from the MT Convention.102

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 delivery

(section 13 (1)). While it is evident from the provision of section 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.


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Localized damage

Provisions of section 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 (section 13 (1)). The definition of delay in

delivery is provided by way of explanation to the relevant section of the Act that is

section 13 (1). The claimant may treat the consignment as lost if it has not beendelivered within ninety consecutive days following the date expressly agreed for

delivery or the date it should have been reasonably expected to be delivered. 103

Limitation in liability

Provisions dealing with the limitation of liability of the MTO for loss, damage or

delay are based on the UNCTAD/ICC Rules. Thus, the MTOs 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 (section 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.104

The MTOs 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

(section 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. 105

The Act also includes, in section 21, special rules dealing with the shipment of

dangerous goods which are based on those of the MTC.106


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Jurisdiction

Provisions of section 25, dealing with jurisdiction, are based on those of article 26 (1)

of the MT Convention, giving the claimant a wide option for instituting an action.

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 (section 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 (section 24).

Lien

Provisions are also made concerning the MTOs 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 MTOs right of lien is

not to be considered as delay in delivery (section 22).

The Act is to override any other enactment and is to have effect notwithstanding

anything inconsistent therewith contained in any other law (section 29). Thus, an MT

contract inconsistent with the provisions of the Act shall be void and unenforceable(section 28).


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Issues in Multi-Modal Transport System

The major challenges facing the Indian transport system are:

Indias roads are congested and of poor quality

Most national highways are two lanes or less with the creation of low lane capacity.

Almost a quarter of all India's road highways have recurrent congestion, reducing

truck and bus speeds to 30-40 km/h. Recurrent congestion on Indian roads contributes

to high fuel consumption and huge pollution. Most roads are of poor quality and the

maintenance of roads remains significantly under-funded with the result that only one-

third of maintenance needs are met. This leads to the deterioration of roads and high

transport costs for users. Taxes and bribes paid between state borders paid by truckers

are estimated to be $5 billion per annum. Road transport accounts for 8th highest road

fatality rate

Poor access to rural areas

Roads are claimed to be a catalyst for the economic development of rural areas.

Almost 70 percent of India's populations reside in rural areas. Although the rural road

network is extensive, some 40 percent of Indias villages are cut off during monsoon

season due to the lack of good access of all-weather roads. This problem is more acute

in certain parts of India especially in the northern and north-eastern states which are

poorly linked to the countrys major economic centres.

Railways are facing severe capacity constraints

In general, Indias high-density rail corridors face severe capacity constraints. Also,

freight transportation costs by rail are much higher than in most countries as freight

tariffs in India have been kept high to subsidize passenger traffic. Moreover, capacity

expansion of rail infrastructure networks is more determined by political compulsions

rather than commercial opportunities.

Urban centres are severely congested

In most Tier I and Tier II cities, roads are often severely congested during the rush

hours. The dramatic growth in vehicle ownership estimated to be at some 15 percent

a year during the past decade has reduced rush hour speeds to as low as 5-10 km an

hour in the central areas of major cities. Also, the intensive construction work to add

capacity (such as roads, bridges, metro development) in congested areas have become


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a further impediment to the flow of the dense traffic which has added to the

congestion problems.

Ports are congested and inefficient

With liberalization of the Indian economy since the early 1990s, port traffic has more

than doubled, touching 521 million tons in 2004-05. The port traffic volumes are

expected to grow further to about 900 million tons by 2011-12. Therefore, India's

ports need to significantly ramp up their capacity and productivity to meet this surging

demand.

Airport infrastructure is strained

With the entry of low cost carriers in the Indian aviation markets, air passenger and

goods traffic has been growing at over 15 percent a year leading to severe strain on

infrastructure at major airports, especially in Delhi, Chennai, Bangalore and Mumbai

airports which account for more than 70 percent of nations air traffic.


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Findings

As demand on transport is derived from demand on trade, the growth in international

trade is reflected in similar and some times higher growth in the demand on

international transport services. Consequently, growth in international transport

services is evidenced by the explosive growth in trade. Over the last two decades,

world trade has grown more than twice as fast as world gross domestic product

(GDP). In fact, it was realized that during the 1990s, growth in expenditure on

international transport grown faster than trade. While world exports increased by

about 75 per cent, real expenditure on intl transport more than doubled.

With the explosive expansion of international trade, global outsourcing of

manufacturing, significant growth in internet and E-Commerce and increasing demand

for Just-In-Time (JIT) deliveries and production system are increasingly shifting the

behavior of shippers to demand door-to-door delivery instead of the traditional port-

to-port system. Similarly, today the total transport chain from the first origin to the

final destination is being regarded as a whole in order to be able to compare

alternatives realistically. Therefore, to ensure the efficiency of this chain and gain

operational control over it, new transport patterns and practices have emerged. While

liner companies became port operators and providers of door-to-door services,

several levels of logistics services providers were created.

Evidently, this will not only increase the demand for more frequent, more secure and

more reliable multimodal door-to-door transport services, but also increase the share

of air transportation. Accordingly, the demand for efficient and prominent MTOs will

increase. However, several countries have realized these developments and invested in

developing and integrating their sea-air transport logistics system to capture the sea-

air transshipment opportunities. While the United Arab Emirates Port of Dubai and

the Malaysian Port of Tanjung Pelepas have successfully implemented this logistics

solution, several other ports like the Jordanian Port of Aqaba will soon follow.


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