Multi-Modal Transportation

Multi-Modal Transport & Applications
Aswatha Nagendra
Agenda
Slide 2
 Multi-Modal Transport Operator (MTO): Definition,

Scope & Role
 Benefits
 Challenges
 Legal, Tax Implications & Documentation
 Performance Measurement
 Best Practices
 Effective Enablers
Modal Contribution
Global Comparison: Modal Mix
US 37 48 14
China 30 23 46 Road
Rail
India 60 31 8 Water
Air
Europe 46 10 43
0% 20% 40% 60% 80% 100%
Road and Rail transportation still dominates in other regions
Source: KPMG
Transport Sector in India
GDP Share of different modes of Transport in India 2010
3% 3%
16%
Rail
Road
Water
Air
78%
Transport GDP Share
Transport sector had contributed 6.5 % share to India’s GDP ($1.3 tn) in 2010
Source: CSO
Agenda
Slide 5

Scope & Role
 Benefits
 Challenges
 Best Practices
MTO - Definition
Slide 6
Multi-Modal Transport Operator
The chain that interconnects different links/modes of transport (air, sea & land)
into complete one 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
MMT - Scope
Slide 7
• Multi-Modal Transport of Goods Act 1993

• Company eligibility for registration as an MTO
• Relevant documentation procedures
• Legal framework and standards
• Key differences between multi-modal and inter-
modal transport
• Main stakeholders involved and their roles
MTO - Role
Slide 8
Shipper
Regulatory
Authority
Multimodal
Transport
Operator
Individual
Contracts
Truckers/Shipping
Ports/Airports
Lines/Railways
CFS/LCD’s
MTO – Role (contd)
Slide 9
Shipper is provided with one or more value added service

in Multimodal Transport System
MTO’s may provide following value added services:
• Consignee billing
• Logistical support for time sensitive products
 Inventory control
 Distribution
 Reporting
• Pickup-on-call for air freight
• Electronic tracking of shipments
• Delivery confirmation service
MTO – Role (contd)
Slide 10
The multimodal transport sector is still nascent

More competition is expected with growth
Key differentiating factors for MTO’s quality of service
• Speed
• Door-to-door capability
• Reliability
• Security
• Safety
• Flexibility & Availability
Multimodal Organization Types
Slide 11
Vessel Operating MTOs

• Individual Shipping companies or groups of consortia of
shipping companies
• Large exporters utilizing their own MTOs by engaging their
chartered ships
Non-Vessel Operating MTOs (NVO-MTOs)

• Freight Forwarders
• Road transport Operators
• Railways
• Airlines
MTO - Registration Requirements
Slide 12
Applicant
Company/Firm/Proprietary concern
Engaged in business Must have a minimum annual turnover of

Rs 50 lacs preceding Financial year
of shipping or freight OR
forwarding in India or Average annual turnover of Rs 50 Lacs
abroad during preceding 3 Financial Year’s
Applicant/Partners/Proprietor Subscribed
Not engaged in share capital not be less than 50 lacs
OR
business of shipping
Aggregate balance in its capital account
or freight forwarding not be less than 50 lacs
in India or abroad • Needs to have office, agents or
representatives in 2 or more countries
MTO - Registration Requirements (contd)
Slide 13
Applicant
Company/Firm/Proprietary concern
• Must establish a registered place in
Applicant not a India
resident of India and • Fulfill the other requirements
not engaged in the • Competent authority will grant the
business of shipping certificate to commence operations as
MTO
FDI Policy
Slide 14
FDI in Logistics and MTO in India
Automatic Route Government Route
All activities
which are not
Investors do not covered under
require approval automatic route
from RBI or GOI can be done
after FIPB
approval
Road Transport
• Most extensive network for

domestic distribution
• Very small fixed investments
compared to other modes of
transport
• It is means for rapid
industrialization and agricultural
advancement
• Used to carry range of products
both high and low value
Road Transport
• India has the 2nd largest road network spanning

Road Network 4.7million kms.
• Carrying 60% of goods carried and 85% of total
passenger traffic in India
Planning commission aims to spend 20% of $1 tn

Investments
on road infrastructure during 12th five year plan
Private sector companies have emerged as key

Private Sector
players in road infrastructure development in India
Road Transport
Advantages Disadvantages
• Ease of availability • Limited Load carrying
• Flexible operations capacity
• Last mile connectivity • Multiple check points
• Low cost for certain loads & • Poor infrastructure
distances • Fragmented sector
• Customized services • More expensive compared to
• Lower capital investment rail & sea
Rail Transport
• Rail transportation has been the

key contributor to domestic and
international trade across the globe
• In India Rail freight is expected to
reach 1 billion tonnes in 2013
• Potential for freight movement
remains largely untapped due to
under investments
• Major products shipped include
metals, fuel, small or large
machinery etc
Rail Transport
• India has the 4th largest rail network carrying 30

Rail Network mn passengers on 12000 trains daily
• 975.2 mn tonnes of freight carried in FY12
Modernization/ • Introduction of mobile ticketing

Technology upgrade • Current system up gradation to increase ticket
booking capacity
Cabinet approval for private ownership of rail lines

Private Sector
through “participative models for rail connectivity
and capacity augmented projects”.
Rail Transport
• Lower cost for the load that is • Inadequate and aging
dense & transported over network
long distances • Slower speed
• Economic mode for bulk • Dominance of govt. control
movement • Inadequate technology &
• Less check points between automation
point of origin & destination • Dependence on road for last
• Better accessibility in the mile connectivity
difficult terrain as compared • Complex procedures &
to road paperwork for booking
Dedicated Freight Corridor
• Dedicated Freight Corridor(DFC) is an

marquee initiative by Indian Railways
• Envisages construction of two

corridors spanning 3300kms
• Eastern Corridor from

Ludhiana(Punjab) to Dankuni(WB)
• Western Corridor from Dadri(UP) to

JNPT, Mumbai
Dedicated Freight Corridor – Plan
Dedicated Freight Corridor – Objectives
Increase rail
freight share in
Segregate modal mix Creation of
freight & additional
passenger freight
lines capacity
Unit cost
reduction by Adoption of high
speeding freight
train operations DFC end technology
to track freight
DFC – A Game Changer
The completion and start of DFC will bring a more balanced mode mix
% share Projected 2020

100 1 1
6 5 6
25
75 36
46
Air
50 Water
69 Rail
25 57 Road
47
0
2007 From 2007 Balanced
Modal Mix
Source: Mckinsey
Marine/Water Transport
• Marine Transport is the traditional

growth engine of trade
• An efficient and cost-effective mode
of transportation
• Less time sensitive and large
quantities of non-perishable cargo
are shipped by this mode
• Products shipped can range from
coal, fuel oil to electronic
components
• Indian ports serve as gateway to International trade
• With 12 major and 187 minor ports which contribute to

935mns of cargo traffic for 2012-13
• Potential to increase the domestic freight share through inland

and costal shipping
• A coastline of 7,551km and about 14,500km of navigable

inland waterways can be utilized with more investment in
developing infrastructure
Key issues :
• Inadequate capacity
• Global competitiveness
• Lack of support infrastructure
• Cabotage laws
• Lowest cost as compared to • Slowest speed compared to
other modes other modes
• Can carry up to 500,000 DWT • Accessibility and frequency
loads may vary by routes
• Most suitable for long haul • Dependence on road for last
and low cost commodities mile connectivity
• Port congestion and capacity
bottleneck may lead to delays
Marine/Water Transport: Costal & IWT
• India is blessed with 7,551km of coastline and about

14,500kms of navigable inland waterways
• This mode is more fuel efficient, environment friendly and
more economical than rail and road
• This sector has remained largely untapped
• India transports only 7% of its domestic cargo by coastal
shipping, or so-called short-sea shipping, while the European
Union transports 42%, China 43% and the US 15%
• Inland water transport (IWT) accounts for less than a 1%
share of goods transported within India
Marine/Water Transport: Costal & IWT
IWT routes utilized for bulk cargo & project related over
dimension cargo
• Cement from Farakka to Nabadweep,
Bhagalpur and Patna
• Hot-rolled(HR) coils from Kolkata to
Tripura via Ashuganj
• Project cargo for planned hydel power projects in Arunachal
Pradesh
• Coal for thermal power plants on Ganga and Brahmaputra
• Iron-ore shipments in Goa region
• Transportation of fly-ash from West Bengal to Bangladesh
Air Transport
• Air Transportation supply

chain increases the
competiveness of global
companies
• Cost of air freight services is
around 4-5 times that of road
and 12-16 times of sea
transport
• Perishables, pharmaceutical
products, express mail and
high value cargo
Air Transport
Key issues pertaining the Air Transportation sector
• Infrastructure gaps
• Inefficiencies in operations
• High investment and operating costs
• Complex procedures and documentation

Air Transport
• Fast speed • High Cost (4-5 times of road
and 12-15 times of rail)
• Suitable for high value • Limited Load carrying
products capacity
• Most suitable for small or • Dependence on road for last
parcel loads, documents mile connectivity
• More reliable as compared to • High investments & operating
other modes cost
Modal Choice
Services Cost Continuum

Higher Lower
Air Cargo Truck Rail Intermodal Rail Carload Rail Unit Water
Fastest Fast Slower

Most Reliable Reliable Less Reliable
Most Visible Visible Less Visible
• Lowest Weight • Range of Weight and Value • Highest Weight

• Highest Value • Rail intermodal competitive • Lowest Value
• Most Time with truck load over long • Least Time Sensitive
Sensitive Cargo distances Cargo
Agenda
Slide 35

Scope & Role
 Benefits
 Challenges
 Best Practices
MTO - Benefits
Slide 36
• Increased Flexibility
 Time
 Modality
 Security features
• Reduced cost
 Being an intermediary, the best linkage cost can be obtained
 Exports become more competitive
 Overall cost leadership
MTO - Benefits (contd)
Slide 37
• Single Point Of Contact

• Reduces burden of documentation &
formalities
• Saves time & cuts pilferage at the points of
transhipment
• Makes the best of each mode
• Frees up working capital
• Better distribution of wealth
Agenda
Slide 38
 Multi-Modal Transport Operator (MTO): Scope & Role

 Benefits
 Challenges
 Best Practices
MTO - Operational Challenges
• Greater distances
Increased • Longer lead times
Uncertainty
• Decreased market knowledge
• Unique customer requirements

• Unique documentation requirements
Increased • Different regulations across countries
Variability
• Currency fluctuations
• Shifting political environments
Multi-Modal Transport Operator
MTO - Operational Challenges
• Extensive use of international service

Decreased firms
Control • Potential customs requirements
• Trade restrictions by governments
Decreased • Longer transit times

Visibility • Longer holding times
• Less ability to track shipment locations
Macro Challenges
Slide 41
• Infrastructure Development
• Regulatory Reforms
• Investment in Technology
Other Challenges
Slide 42
• Infrastructure Development
 Containerization
 Dry ports (CFS/ICD)
 Port Sector
 Inland waterway
 Road transportation
Other Challenges
Slide 43
• Regulatory Reforms
 Multi-modal Transport of Goods Act 1993
 Private Freight Terminals Policy
 Draft Coastal Shipping Policy
 Cabotage Policy
 Policy to permit private operators to move
container trains on Indian Railways
 Impact of GST
 Foreign Direct Investment
Other Challenges
Slide 44
• Investment in Technology
 Cloud computing and software-as-a-service
 Global Positioning System
 Radio Frequency Identification
 Enterprise Resource Planning
 Mobile Technology
Agenda
Slide 45

 Benefits
 Challenges
 Best Practices
Legal Framework
Slide 46
2002
1993
Act amended
to simplify
1992 MMTG act rules
Legal enacted in
recognition India
1980 for term under
Multi-modal UNCTAD/ICC
transport rules
term
1930 introduced  Act provides registration for 3
by UN years at a time which can be
1st made
by renewed for a further period of
UNIDROIT
3 years
 Director General of shipping is
the competent authority
Tax Implications
Slide 47
GST will subsume various taxes which will make

multimodal transport arrangements more tax efficient
Tax Implications
Slide 48
• Services consolidation will increase availability

of efficient and organized service providers
• Reorganized country wide networks decrease
cost of primary freight
• Increased secondary freight due to
consolidation of warehouses
• Eliminate cascading effect of taxes
Multi-modal transport document (MTD)
Slide 49
Multimodal transport document(MTD) is the accepted

document whenever two or more modes of transport takes
place from the acceptance of goods in India through the place
of delivery of goods outside India
UNCTAD/ICC definition
“MT document, means a document evidencing a multimodal
transport contract and which can be replaced by electronic data
interchange messages insofar as permitted by applicable law
and be,
a. Issued in a negotiable form or,
b. Issued in a non-negotiable form indicating a named
consignee”
Slide 50
By issuance of MTD, the MTO:

• Undertakes to perform and/or in his own name to procure
performance of the multimodal transport including all services
which are necessary to such transport for the time of taking the
goods in charge to the time of delivery, and accepts
responsibility for such transport and such services to the extent
set out in this conditions
• Accepts responsibility for the acts and omissions of its agents

or servants when agents/servants are acting within their scope
of environment as if such acts or omissions were owned
Slide 51

• Accepts responsibility for the acts/omissions of any other
person whose services he uses for the performance of the
contract evidenced by multimodal transport document
• Undertakes to perform or to procure performance of all acts

necessary to ensure delivery
Slide 52

• Assumes liability to the extent set out in these conditions of
loss or damage to the goods occurring between the time of
taking them in charge and the time of delivery and undertakes
to pay compensation as set out in these conditions in respect
to such loss or damage
• Assumes liability to the extent set out in these conditions for

delay in delivery of goods and undertakes to pay
compensation as set out in that condition
Evidentiary Effect of MTD
Slide 53
• The MTD shall be prima facie evidence of the taking in charge

by MTO of the goods as described therein
• Proof to the contrary by the MTO shall not be admissible if the

MTD is issued in negotiable form and has been transferred to
the third party , including a consignee, who has acted in good
faith in reliance on the description of goods there in
Responsibilities and Liabilities of MTO
Slide 54
• MTO’s remain responsible for the goods throughout the period

from the time they receive the consignment until the same is
delivered
• MTO’s shall be liable for loss resulting from

 Any loss or damage to the consignment
 Delay in delivery of consignment and consequential loss or damage
arising from such delays
• MTO’s shall not be liable if he proves that no fault or neglect

on his part or that of his agents had caused or contributed to
such loss/damage or delay in delivery
Slide 55
Limits of Liabilities
• Any loss of, or damage to any consignment where the nature
and value of the goods have not been declared by the
consigner before such consignment was take in charge by the
MTO where in such loss or damage is not known in transit,
then the liability of the MTO shall not exceed 2 SDR/Kilo of
cross weight of consignment loss or damaged or 666.67 SDR
per package or unit lost or damaged whichever is higher
Slide 56
Limits of Liabilities
• If no sea or inland waterways leg is involved in transit then the
limitation is based solely on weight i.e. 8.33 SDR/Kilo of cross
weight of goods loss or damaged
• If the stage of transport at which the loss of damage occurred

is known the limit of liability of MTO shall be determined in
accordance with the provision of relevant law or convention
governing limitation of liability
Slide 57
Notice of Loss/Damage to goods

• Notice shall be given by the consignee in writing to the MTO
immediately if the losses are apparent
• However if the loss/damage is not apparent such notice shall
be given within 6 days from the date of delivery
Limitation on Legal Action

The MTO shall not be liable under any of the provisions of the
act unless legal action against him is brought within 9 months of:
a. The date of delivery of the goods
b. The date when the goods should have been delivered
c. The date on and from which the consignee has the right to treat the goods
as lost
Agenda
Slide 58

 Benefits
 Key Challenges
 Best Practices
 Case Study
Performance Measurement
Slide 59
• Till today, No inter-sectorally (between rail, road, ocean,

inland waterway and airport transport) accepted concept for
measuring and evaluating the performance of different
transport mode is available
• Individual KPI’s of each mode of transport is monitored
separately in terms of,
 Transit-time
 Cost
 Safety
 Security
 Visibility
Agenda
Slide 60

 Benefits
 Key Challenges
 Legal & tax matters
 Best Practices
Best Practices
Slide 61
Parcel case strapping

• Multiple parcel orders for the same customers are strapped
and shipped to the customer as single shipment
• It reduces cost due to optimal weight/cube bracket
• Shipments that are too light and small and fall outside these
brackets are more expensive if shipped independently
Parcel/LTL minimum charge analysis

• Parcel cost and LTL minimum charges are compared for
each shipment and shipped using the cheaper mode
Best Practices (contd)
Slide 62
Parcel Zone Jumping

• Shipments to expensive zones shipped at a lower cost by
combination of truckload and parcel
• Parcel shipments to the same zone are consolidated and
shipped via truck load to the zone
• Cross-docked and delivered to customers via the parcel
shipments
Cross Docked/pooling
• LTL shipments going to the same geographical area (Same
pin code) are pooled at the origin
• Shipped to the destination pin codes, cross docked there and
finally delivered to end customers via LTL shipments
Slide 63
Aggregation
• Aims at consolidating orders and shipments between the
same origin and destination points
• This builds larger shipments to customers without changing
modes
Example - Shipping fewer LTL shipments in heavier LTL weight brackets
against shipping more LTL shipments in lighter LTL weight brackets.
Consolidation/Co-loading
• Similar to aggregation best practice with the difference of
consolidating LTL and partial truck load shipments into FTL
shipments
Slide 64
Continuous Move Routing

• This practice helps convert partial truck loads to full truck
loads and minimizes empty running
• Instead of going from point A to point B and back to point A
continuous move routing builds routes such as A to B to C
and ultimately back to A
• The interim stops can be either for making customer
deliveries or picking up loads
Multi-Modal Transport
Impact of Best Practices
Slide 65
Shippers
• Lower cost of transportation by collaboration and modal
optimization
• Collaboration will lower lane rates and help reduce
transportation overhead cost of individual organizations
• Lets companies focus on their core competencies such as
manufacturing, new product design, Marketing etc.
• Outsourced parties to concentrate on their core competencies
such as reducing cost through better asset utilization
• Also result in lower carbon footprint, less congestion, lesser
noise pollution etc.
Slide 66
Carriers and Private Fleet

• Will help to minimize empty running and gain incremental
revenue with same distance covered
• Substantial impact on bottom line there by providing
organizations an opportunity to reduce cost-to-serve and lane
rates
• Modal optimization will also help reduce carriers and private
fleet cost-to-serve, improve asset utilization and lower capex
needs
• Carriers and private fleet will also be able to meet their
sustainability goals
Slide 67
3PL Providers
• Can be appointed for multi party collaboration
• Key success factors for 3PLs will be seamlessly integrating
disparate systems of shipper organizations and working with
different cultures of various organizations
• With reasonable fees, shipper organizations would look for
long term engagements
Building World Class Multimodal Transport Network
Slide 68 Developing and Deploying India’s Supply Chain Talent
• Assess current or as-is scenario

• Evaluate alternate options available in market place
• Select the right mix through optimization
• Review performance through close monitoring of
KPIs
• Use optimization as an ongoing process
Agenda
Slide 69

 Benefits
 Key Challenges
 Best Practices
Effective Enablers
Slide 70
• Highly skilled expertise (commercial contract and maritime law,

International freight forwarding, banking and insurance etc.)
and extensively developed use of IT and carrier network
• Regulatory frameworks that can provide freedom to plan and
operate to carriers and reliable liabilities regimes to customers
• Simplified customs administrative procedures and practices at
ports and border points between countries to minimize and
eliminate delays
• Efficient ports with excellent ship turnaround times, high
standards for safety and security of cargo and ships, and high
cargo productivity
Effective Enablers
Slide 71
• Effective and efficient security and safety along the entire

transport chain (Intra and Inter Modes)
• Strong regional co-operation with dedicated political will to
develop, enact and implement legal regimes that favour
multimodal transportation
• Good road, rail, water and air transport infrastructure and
super structure on a national and regional basis
THANK YOU!
Slide 72 Developing and Deploying India’s Supply Chain Talent

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Multi-Modal Transport & Applications

 Multi-Modal Transport Operator (MTO): Definition,

Global Comparison: Modal Mix

0% 20% 40% 60% 80% 100%

Road and Rail transportation still dominates in other regions

GDP Share of different modes of Transport in India 2010

Transport GDP Share

 Multi-Modal Transport Operator (MTO): Definition,

Multi-Modal Transport Operator

• Multi-Modal Transport of Goods Act 1993

Shipper is provided with one or more value added service

The multimodal transport sector is still nascent

Vessel Operating MTOs

Non-Vessel Operating MTOs (NVO-MTOs)

Engaged in business Must have a minimum annual turnover of

FDI in Logistics and MTO in India

Automatic Route Government Route

• Most extensive network for

• India has the 2nd largest road network spanning

Planning commission aims to spend 20% of $1 tn

Private sector companies have emerged as key

• Rail transportation has been the

• India has the 4th largest rail network carrying 30

Modernization/ • Introduction of mobile ticketing

Cabinet approval for private ownership of rail lines

• Dedicated Freight Corridor(DFC) is an

• Envisages construction of two

• Eastern Corridor from

• Western Corridor from Dadri(UP) to

% share Projected 2020

• Marine Transport is the traditional

• Indian ports serve as gateway to International trade

• With 12 major and 187 minor ports which contribute to

• Potential to increase the domestic freight share through inland

• A coastline of 7,551km and about 14,500km of navigable

• Lack of support infrastructure

• India is blessed with 7,551km of coastline and about

• Air Transportation supply

Key issues pertaining the Air Transportation sector

• High investment and operating costs

• Complex procedures and documentation

Services Cost Continuum

Fastest Fast Slower

• Lowest Weight • Range of Weight and Value • Highest Weight

 Multi-Modal Transport Operator (MTO): Definition,

• Single Point Of Contact

 Multi-Modal Transport Operator (MTO): Scope & Role

• Unique customer requirements

• Extensive use of international service

Decreased • Longer transit times

 Multi-Modal Transport Operator (MTO): Scope & Role

GST will subsume various taxes which will make

• Services consolidation will increase availability

Multimodal transport document(MTD) is the accepted

By issuance of MTD, the MTO:

• Accepts responsibility for the acts and omissions of its agents

By issuance of MTD, the MTO:

• Undertakes to perform or to procure performance of all acts

By issuance of MTD, the MTO:

• Assumes liability to the extent set out in these conditions for

• The MTD shall be prima facie evidence of the taking in charge

• Proof to the contrary by the MTO shall not be admissible if the

• MTO’s remain responsible for the goods throughout the period