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Aswatha Nagendra
Multi-Modal Transport & Applications
Agenda
Slide 2
US 37 48 14
China 30 23 46 Road
Rail
India 60 31 8 Water
Air
Europe 46 10 43
Source: KPMG
Multi-Modal Transport & Applications
Transport Sector in India
3% 3%
16%
Rail
Road
Water
Air
78%
Transport sector had contributed 6.5 % share to India’s GDP ($1.3 tn) in 2010
Source: CSO
Multi-Modal Transport & Applications
Agenda
Slide 5
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
Multi-Modal Transport & Applications
MMT - Scope
Slide 7
Shipper
Regulatory
Authority
Multimodal
Transport
Operator
Individual
Contracts
Truckers/Shipping
Ports/Airports
Lines/Railways
CFS/LCD’s
Multi-Modal Transport & Applications
MTO – Role (contd)
Slide 9
Applicant
Company/Firm/Proprietary concern
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
Multi-Modal Transport & Applications
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
Multi-Modal Transport & Applications
FDI Policy
Slide 14
All activities
which are not
Investors do not covered under
require approval automatic route
from RBI or GOI can be done
after FIPB
approval
Multi-Modal Transport & Applications
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
Multi-Modal Transport & Applications
Rail Transport
Advantages Disadvantages
• 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
Multi-Modal Transport & Applications
Dedicated Freight Corridor
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
Multi-Modal Transport & Applications
DFC – A Game Changer
The completion and start of DFC will bring a more balanced mode mix
0
2007 From 2007 Balanced
Modal Mix
Source: Mckinsey
Multi-Modal Transport & Applications
Marine/Water Transport
Key issues :
• Inadequate capacity
• Global competitiveness
• Cabotage laws
Multi-Modal Transport & Applications
Marine/Water Transport
Advantages Disadvantages
• 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
Multi-Modal Transport & Applications
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
Multi-Modal Transport & Applications
Air Transport
• Infrastructure gaps
• Inefficiencies in operations
Advantages Disadvantages
• 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
Multi-Modal Transport & Applications
Modal Choice
Air Cargo Truck Rail Intermodal Rail Carload Rail Unit Water
• 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
Multi-Modal Transport & Applications
MTO - Benefits (contd)
Slide 37
• Greater distances
Increased • Longer lead times
Uncertainty
• Decreased market knowledge
• Infrastructure Development
• Regulatory Reforms
• Investment in Technology
Multi-Modal Transport & Applications
Other Challenges
Slide 42
• Infrastructure Development
Containerization
Dry ports (CFS/ICD)
Port Sector
Inland waterway
Road transportation
Multi-Modal Transport & Applications
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
Multi-Modal Transport & Applications
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
Multi-Modal Transport & Applications
Agenda
Slide 45
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
Multi-Modal Transport & Applications
Tax Implications
Slide 47
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”
Multi-Modal Transport & Applications
Multi-modal transport document (MTD)
Slide 50
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
Multi-Modal Transport & Applications
Responsibilities and Liabilities of MTO
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
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
Multi-Modal Transport & Applications
Best Practices (contd)
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
Multi-Modal Transport & Applications
Best Practices (contd)
Slide 64
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.
Multi-Modal Transport
Impact of Best Practices
Slide 66
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
Multi-Modal Transport
Building World Class Multimodal Transport Network
Slide 68 Developing and Deploying India’s Supply Chain Talent