International Transport Law

:Carriage of Goods through

Multimodal Transportation in
Supply Chain Management
By
Sunil Kumar Agarwal, Ph.D.
(JNU)
Visiting Faculty, BIMTECH
E-mail:
agarwalnet@gmail.com

Modes of Transporting Goods

Carriage of Goods is an important element of
the Supply Chain Management.
The core process that we need to take into
account is the physical movement of goods
between factory/seller to consumer/buyer
involving the following transport legs.
Transport Legs in carriage of Goods consists
of : (a) Road transport, (b) Rail transport, (c)
Air transport, (d) Sea transport

Transport Route from Tughlakabad to JNPT

International transport of Goods

Supply Chain Process

Carriage of Goods by Trucks/ Railways
from Factory to Dry Port at Tughlakabad

The container terminal of Container Corporation of India

(Concor) at Tughlakabad, near New Delhi (Dry Port/ICD)

Jawaharlal Nehru Port (JNPT) near Mumbai.

Supply Chain Process

Goods are carried upto ports like JNPT,
where from goods are exported or
imported, and are linked to container
carrying sea vessels/Liner Shipping at
the port.
The goods that are carried in this
manner are part of the overall supply
chain of manufacturers.

Basics of Transport Law

International transport conventions such as
Warsaw and Montreal for air, Hague-Visby,
Hamburg and Rotterdam Rules for sea, the
Carriage of Goods by Road (CMR) and the
Carriage of Goods by Rail (COTIF) provide
international legal frameworks for the
carriage of goods in the different transport
legs.
These conventions were designed primarily
to provide assurance to the shipper (seller or
consignor) that the means of carriage for
their goods is safe and that the carrier will
hand over the goods to the person nominated
by the consignor at the point of destination.

Basics of Transport Law

The relevant law governs the rights,
responsibilities,
liabilities,
and
immunities of the carrier and of the
persons employing the services of the
carrier
In reality the conventions concentrate on
who is liable in the event of damage or
loss.

Basics of Transport Law

About 90 per cent by weight of world trade is
carried by the international shipping industry.
Hague-Visby, Hamburg and the more recent
Rotterdam Rules, translated into national law
through Acts such as the Carriage of Goods by
Sea (COGSA), drive the way goods are
described by the consignor on transport
documents and the way carriers can reduce
their liability.
One of the key legal documents for sea cargo is
the Ocean Bill of Lading.

Containerization:
Developments In Multimodal Transport
The
movements
of
goods
in
the
containerized form has increased worldwide,
including India, over the last decades.
The following factors have triggered the
containerization
of
goods
in
the
contemporary supply chain management:
- Demand for Door-to-Door Service,
- requirement of speed,
- timeliness, and
- reliability

Developments In Multimodal Transport

The containerized movement of goods
achievement of the followings:

enables

- Multi-modal
transportation
facilitates
the
uniformity in the container size which may it easier
to move goods through different modes of
transport.
- Firstly, it synergies transport operations in
different legs
- secondly, the container as a carrier is a natural
integrator across modes and is in keeping with the
requirements of modern movement of high value
commodities.

Operational Benefits of
Containerized Multimodal Transport
Containerization address a number of operational
optimization issues involved in the management of the
supply chain:
- Door-to-Door movement of goods in a cost-effective
manner.
- It is undertaken under a single multimodal transport
contract.
- Consignor is thus required to enter into one contract,
known as Multimodal Transport Document with the
Multimodal Transport Operator No need to contract with
the Carriers.
- Liability Issues in case of damage or delays are
streamlined.

Main Features of MMT

The carriage of goods by two or more
modes
of
transport,
under
one
contract, one
document and one
responsible party (MTO) for the entire
carriage, who might subcontract the
performance of some, or all modes, of
the carriage to other carriers.
Integrates whole of transport chainimportant for achieving optimization in
Supply chain management.

Main Features of MMT

Goods stowed in a container could be transported
by different means of transport, such as ships,
railway wagons, road vehicles or aircrafts, from
the point of origin to the final place of destination,
without being unpacked for sorting or verification
when being transferred from one means of
transport to another.
Shippers/consignees needed to pursue one single
operator (MTO), in the event of loss of, or damage
to, the goods involved in multimodal transport,
who would be responsible for the overall
transport, rather than against several unimodal
carriers involved.

Main Features of MMT

Transport of Goods under a single
transport
document
covering
all
modes of transport from the exporters
premises to the consignee's premises
such Multimodal Transportation under
a single document has a number of
advantages such as:
reduction in overall transport cost,
reduction in delays,
smoother and quicker movement of
and
improvement in quality of services.

Issues in Multimodal
Transportation
In the real world, the need for carrying goods from one
place to another cannot be overemphasised.
Goods are to be moved from one country to another.
For these purposes, a contract of carriage is to be
entered into.
The persons, organisations or associations which carry
goods are known as carriers.
Goods may be carried by land (including inland
waterways), sea or air.

Issues in Multimodal
Transportation
There was a need for an international
legal framework for multimodal transport
of goods to facilitate multimodal
operations in carriage of goods doorto-door operation.
Another dimension to the management of
multimodal transport activity is that it is
difficult to set norms and design systems
that are easily accepted.

Issues in Multimodal
Transportation
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
need for a legal regime to govern the terms of
the contract and specify the basis of liability
and responsibilities of the Multimodal
Transport Operator.

Issues in Multimodal
Transportation
This is because there are a number of actors :
Shipper
(consignor),
consignee,
carrier,
transporters, freight forwarder, insurer and
other service providers etc.
there are natural conflicts of economic interest
that are not easy to resolve.
This is quite typical in an integrated supply
chain management environment context, where
multi actor co-operation is required

Developments in International Transport Law

Hague Rules, 1924.

Vishby Protocol, 1968
Hamburg Rules, 1978
The UN Convention on Multimodal
Transport of Goods, 1980
The Rotterdam Rules, 2009

Background to Rotterdam Rules

Growth in containerized transportation of
cargo.
Need for uniformity and replacemen of
Hague/Vishby and Hamburg Rules.
Need to provide a legal framework for
multimodal transportation (UN Convention
on MT failed to come into force).
Rotterdam rules are more advanced
than Hague-Visby and the Hamburg
rules.

Rotterdam Rules: An Overview

Applies to liner transportation ,
Not to charter-parties.
Will apply to carriage in which the
place of receipt or port of loading
or port of discharge or place of
delivery are in different states and
one of the states is a Contracting
State.

Rotterdam Rules: An Overview

Its application is extended beyond
loading and discharge to places of
receipt and delivery ( Article 5).
Extends
Carriers
period
of
responsibility beyond sea leg of
transport chain.
Starts when goods are received
and ends when the goods are
delivered (see Article 12)

Rotterdam Rules: An Overview

If loss or damage occurs other than during a
sea leg the convention would apply unless
some other international convention applies
compulsorily to the particular stage of carriage
(Article 26).
Carrier made liable for fault of Performing
parties (loading, unloading etc.)
List of exceptions from liability for the carrier
quite similar to the Hague/Vishby Rules, but
there are significant differences- due diligence,
sea-worthiness etc.

Rotterdam Rules: An Overview

Exceptions would be subject to the overriding
due diligence obligation (17.5 a)).
Departure from the HV Rules towards the
Hamburg Rules, the carrier can become liable
for loss or damage, including pure economic
loss, caused by delay (Article 21).
Likely to significantly increase carriers liability
exposure for claims; loss or damage to cargo,

Rotterdam Rules: An Overview

The carrier is liable if the claimant can
prove loss, damage or delay arising
during the period of responsibility.
Relieved from liability if the carrier can
prove the absence of fault and/or
reliance on an exception

Rotterdam Rules: An Overview

Limitation of Liability: Follows the HV
Rules concept of package and weight
limits, but currently adopts the monetary
amounts of the Hamburg Rules (Article
59)
Limits increased from 666.67 to 875 SDR
per package and 2 SDR to 3 SDR per kilo
whichever is the higher (Article 59).
Time bar for claim: Extended to 2 years
from the date of delivery (Article 62)

Multimodal Transport Act, 1993

Indian Government recognizes the
value of integrated logistics to
domestic companies in improving
their international competitiveness.
This is critical to underpinning Indias
planned future economic growth.
Accordingly, India has enacted
Multimodal Transport Act in 1993.

the

Salient Features of MMTG Act

Facilitates door to door multimodal transport system.
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.
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.
MTO may be Non-Vessel Operating Carriers (NVOC)

MTO
Three categories of companies are
eligible to be registered as MTO's.
These include
(1) shipping Companies
Non-Vessel Operating Carriers (NVOC)
(2) Freight Forwarding Companies
(3) Companies which do not fall in either
of the above two categories.