INTERMODAL TRANSPORT - CONNECTING THE MODES OF TRANSPORT

Intermodal transport is the chain that interconnects different links or modes of transport – sea, air and land- into one complete process that ensures an efficient and cost effective door-to-door movement of goods/containers under the responsibility of a single transport operator, known as a Multimodal Transport Operator (MTO), on one transport document.

Due to containerization, maritime transport could be easily integrated with land transport modes to formulate an efficient and cost effective intermodal transport system.   Action must be taken to ensure fuller integration of the various modes as links in an efficiently managed transport chain which will join up all the individual services. This is essential for meeting the growing freight flows of the country.

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Fig: 1

Multimodal Transport – Connecting all modes.

Intermodal logistics is designed to cut transit times, decongest landmodes and is beneficial to the shippers in terms of increasing flexibility and reducing cost of logistics. More specifically, the benefits are:

a.       Single point of contact: Shipper has to deal with only the multimodal operator (MTO) like a coastal shipping line or forwarder, who acts as an agent for the shipper. Their relationship is governed by a single multimodal transport contract. The MTO, in turn, enters into separate contracts with transporters, cargo consolidators, ports, airports etc., coordinates customs procedures and thus manages end-to-end freight movement.

                                                 

Source: Deloitte Report, Intermodal and Multimodal Logistics,2012

Fig: 2

Multimodal Transport Operator – Single point of contact

b.       Reduces burden of documentation and formalities: A single contract can be negotiated with the MTO instead of having separate dealings with all the transport operators like road and rail.

c.        Saves time and cuts pilferage at the points of transhipment: The MTO provides marine containers and maintains necessary communication links and co-ordinates with each party throughout the door-to-door logistics chain. This will reduce the risks of loss of time, pilferage and damage to cargo at transhipment points.

d.       Reduces cost: The MTO can manage to get attractive freight rates from the transport operators due to regular volume support. This brings down the overall logistics cost for the shipper and in the long term, increases demand.

e.        Makes the best of each mode: It is possible to combine the specific advantages of each mode in the trip such as flexibility of road haulage, larger capacity of railways and the lower costs of water transport in the best possible fashion. Eg Piggy back , Fishy Back and Tranship systems.

f.         Frees up working capital: In the present supply chain management system, the transport vehicles are treated as moving warehouses. An indirect benefit to the shippers is that shorter transit time allows companies to keep less inventory on hand which in turn frees up working capital.

g.       Better distribution of wealth: Multimodal transport brings down the virtual distance between the origin and destination of cargo. This helps in shifting industrial growth from the traditionally developed coastal regions to the landlocked interiors of the country.

The multi-modal transportation in India is governed by the Multimodal Transportation of Goods Act 1993.

           Multimodal Transportation of Goods ACT,1993

The Indian government recognized the benefits of multimodal transport way back in the early 1990s and came up with the Multimodal Transportation of Goods Act in 1993 with the objective of encouraging growth of exports from India. Through the Act the government aimed at developing international multimodal transport which would reduce logistics costs and thus make Indian products more competitive in the global market. The Act established licensing requirements, contractual terms (through the Multimodal Transport Document) and liability regime. The Act was again amended in the year 2000 to give more protection to shippers.

According to trade, the Act needs to be strengthened to address issues such as liability regime, setting of service standards and registration of service providers, to provide transparency in operations. Trade estimates that these amendments should bring down transit time for transport of goods by 40-50%.In view of the overall efficiencies associated with this system, Government should develop policy interventions encouraging companies to use this.