Transportation of international trade merchandise has traditionally been carried the intermodal way, utilizing different modes of transport such as road transport, railways, inland waterways and shipping, and in the resulting transport chain, exporters and importers, have to deal with many different carriers, each having its own liabilities for the clearly demarcated part of shipment.
Though the concept seemed basically to contain nothing new, so much has indeed changed that the multimodal transport has become a new phenomenon. What happened was that uniformity of packing, development of technology, rising cost of operating the transport vehicle, the concentration of responsibilities and liabilities, and other developments have, together, redefined the whole exercise of international freight movement. The concept of multimodal transport gained popularity with the advent of containerization, as a standardized container stuffed with cargo facilitated through transportation and the container as a unit could negotiate different modes of transport enroute. This idea of modern integrated transport system led to the emergence of Multimodal Transport Operators (MTOs). To simplify the transportation of cargo from a shipper’s warehouse to the consignee’s warehouse under the overall responsibility of one operator, a Multimodal Transport Operator is required to take complete charge of the carriage of goods.
Transport has become integrated in a much wider process of manufacturing, sale, and distribution. Transport acts much more as a moving storage to arrive at destination just on the time the goods are needed for sale or in the production process. We now talk about physical distribution management, of just – in – time inventories, of total transport responsibility and liability.
The economic & commercial advantages of Multimodal Transport are enormous which could help make our international trade competitive due to reduction in overall transportation costs. Some of the benefits could be stated as follows :
Reduced transport cost;
Speedier cargo flows;
Enhanced export potential;
Facilitation of exports of non – traditional goods;
Reduced inventory levels by stable supplies of imports;
Reduced certainty in the transportation cost;
Improved investment potential through reliability;
Reduced port congestion;
Improvement in the balance payments by retaining greater share of transportation cost in the country;
Facilitates optimum utilization of national infrastructure;
Improved national control over transport network;
Reduced paper work by simplified customs procedures.
Opportunities for national insurance to play a greater role;
Improvement of the GNP through more economic activities on the national highways and sea – land interface.
Although, nearly all modes of transportation are available in the country, we are still in the era of unimodal transportation. The concept of an integrated transportation or a multimodal transportation has yet to take roots for which more concerted efforts on the part of trade, transport industry and the government is urgently needed. Intermodalism and multimodalism, although both essentially embody an activity of similar form and function and are commonly used in the synonymous sense, however, there is a subtle conceptual difference between the two concepts in terms of liability. While it is not easy to bring about a very definitive distinction between the two terms, it is the feeling of experts that the principal difference between intermodalism and multimodalism lies in the element of liability. Inter – modernism is generally construed as a transport from using more than one mode and operated by one or more different carrier each individually liable to the cargo owner for the transportation of his cargo under the particular transport leg. The essence of multimodalism lies in the provision of a door – to – door transport service where a single agency assumes full responsibility vis – a vis the shipper for the complete carriage of carriage of cargoes although such carriage may involve more than one operator. It is this concept of multimodalism that has, in developing countries, brought about an emergence of a special category of functionaries called Multimodal Transport Operators. Today, such multimodal transport operators have played an active role in having taken modern transport technology to developing countries where they often have to operate in a regulatory environment since very few such countries have statutory rules on multimodal transport.
A national perspective is therefore of special significance if multimodalism, as a transport concept, is to be promoted and perpetuated in developing countries. It is today for most Government’s particularly of SAARC countries, to consider how national transport organizations can assume the role of MTO’s. it is to be kept in mind that unless the national transport companies themselves undertake such operations they will have to be relegated functionally to mere subcontracting on behalf of foreign MTO’s. The development of national MTO’s must of course be viewed against the background that the Government is indeed keen to promote multimodalism within the country in an appropriate regulatory framework.
Multimodal transport operations also bring about economics of scale. With an integrated approach to transport planning each mode can be effectively used for the purpose it is best suited, taking the fullest advantage of the complimentary nature of different modes. With increasing development of containerization which lends itself easily to intermodal transfers such integration should not pose any problem.
In the context of multimodal transport the dominant role of ocean transportation and more precisely, of liner shipping is a matter of particular significance. Containers, which constitute the very backbone of the multimodal concept, are predominantly carried in liner shipping and it is, consequently almost impossible in the present situation to envisage a sea leg of multimodal voyage catered for by a non – liner operator. The significance of this fact becomes all the more pertinent in the role played by liner freight rates in the ultimate total costs involved in multimodal transport.
Multimodal transport to be effective would need corresponding development of containerization and ancillary services such as inland haulage, cargo consolidation, freight forwarding and groupage, and it is in this light that the present day role of freight forwarders and NVOCC’s should be examined. It would also entail is significant change in export procedures and documentation by way of introduction of the combined or through bill of lading.
Containerisation in India had arrived in 1973 and four ports since that period have been identified and developed for container handling. At the end of 7th plan a sum of Rs. 240 crores was spent to create additional facilities to handle about 8.7 m tones of container traffic as against an estimated figure of 9.5 million tones. With a view to encouraging door – to – door movement of containers, twenty one locations in the country have been identified to operate as inland container depots with eight of them having since been commissioned. It is however, a matter of concern that despite these developments the overland movement of container from different container handling ports have fallen short of the expected level. This would, in turn, serve to reveal a situation where containerization has predominantly been confined to port – to – port operation rather than a door – to – door one. It is, of course, a matter of encouragement that by the end of the next five years 30% of the total container traffic has been earmarked as intermodal.
Meanwhile, several Chambers of Commerce, Shipper’s Councils and the ESCAP/UNCTAD Secretariats have emphasized the need for an early introduction of Mutimodal Transport system in India and for an expeditions enactment of Multimodal Transport Goods Act by the Government of India and suggested following steps to be taken by the Government for the development of multimodal transport in the country.
Legal Implications :
International multimodal transport of goods (MT Convention) defines multimodal as “carriage of goods by at least two different modes of transport on the basis of multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country”.
According to the MT Convention there are different types of transport operators. They are vessel operating multimodal transport operators’ (VOMTOs) or non vessel operating multimodal transport operators (NVOMTOSs).
The multimodal transport operators mean “ any person who on his behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract”.
Since the system differs from that of on carriage by sea the question of liability and insurance of transport was a problem for sometime. Accordingly the international convention on the multimodal transport have gone into this aspect and advised modification/revision of the Hamburg rules, as at present certain clauses of Bill of Lading issued in the normal system cannot be made applicable to the multimodal transport system fully, as a sea carrier’s liability comes to an end when the container is landed in a port as per the existing Bill of lading. As per the provisions contained in the MT Convention a through Bill of lading not only covers the whole part of the transport referred to in the document, but also contains a through liability for the issuer.
Multimodal transport principles bring a significant improvement in the old system of liability regime and make the system, which is one of the simplest since the MTO under the MT Convention, mandatorily liable for the whole of the transport covered by the MT Contract. In the Anglo – American Law the liability of carriers was originally strict and not subject to any monetary limitations. However, under the principles of freedom contract, ship owners began to reduce or even wholly avoid their liability by numerous expression of this principle is found in the “law of general average” i.e. the cost incurred to rescue values exposed to a common danger at sea should be distributed in proportion between such value i.e. cargo, freight and ship. However, they are common features in law of carriage of goods, in that carriers may reduce their liability to a certain limitation amount. Since there are different opinions between the ship owners and shippers there was a compromise introduced in the Brussels Bill of Lading Convention held in 1924 and later on limitation amount was specifically expressed in Hague Rules as 100 Pounds Sterling per unit.
With regard to the liability on the carriers, there had been much debate and exemptions were given on the basis of “beyond the control” in other words called “Force Majeure” clause. Special provisions and incorporated for loss or damage in article 5.4 and 5.5 of Hamburg Rules.
While the Hague Rules and the 1968 Protocol to those Rules (Hague/VISBY RULES) are lacking in provisions expressly regulated in other conventions (Hamburg Rules article 5.2. and MT Convention article 16.2).
Under the MT Convention the MTO is in principle made responsible independently of the rules which apply to the actual carriers. As per the MT Convention the MTO would have to assume genuine through liability for the whole transport covered by the contract. The MT Convention gives legal recognition to the MT documents when such documents have been issued in a negotiable form. Although according to the mentioned provisions from the Hague Rules amended by Hague/Visby protocol the carrier has a duty to convey information with respect to the goods to the consignees and exercise a reasonable control of such information. This by no means represents a sufficient guarantee for a buyer who might have paid for the goods in advance relying on the information contained in the Bill of Lading. However, it may be noted that carrier’s control is limited to the apparent good order condition of goods particularly in container traffic. Here it is worthwhile to mention that arbitration clauses are not very common in Bill of Lading and transport documents for other modes of transport but both Hamburg Rules and MT Convention expressly acknowledge arbitration clauses.
As long as sellers under the contracts of sale are required to submit a Bill of Lading under the terms of C & F and CIF, their right to demand a Bill of Lading cannot be abolished, but in order to conform the modern development, International Chamber of Commerce has in 1980 revised INCOTERMS by adding few terms by FRC, DCP, DDP and CIP. This is to replace the FOB, C&F and CIF in such modern Liner Trade or multimodal transport. This will significantly reduce shippers demand for Bill of Lading in future.
1. Fee carrier (named point) (FRC) : This is more or less based on the same principle of FOB excepting that the seller fulfils his obligation when he delivers the goods into the custody of the carrier at the named point.
2. Delivered duty paid (DDP). This term can be used irrespective of the mode of transport.
3. Freight /Carriage Paid : (named destination) DCP here seller pays the freight for the carriage of goods to the named destination. However, the risk of loss to goods is transferred to this first carrier and not at the ships rail.
4. Freight /Carriage and insurance paid to (named destination) : CIP here the seller has to procure transport insurance against loss or damage during carriage.
However, according to the article 14.1 of the Hamburg Rules the shipper has the right to demand from the carrier a bill of Lading i.e. “Shipped on board Bill of Lading”. The MT Convention as per article 5.1 gives choice to the shipper to demand either a negotiable or non negotiable MT document depending upon his need.
It is important to establish an international regime for multimodal transport. The efforts of CMI, UNIDROIT and IVV have served on obvious need but the risk of a proliferation of different type of MT documents with the different systems of liability can only be avoided by a globally accepted international convention such as the MT Convention.
The MT Convention by force of law sets forth its important principle that MTO would have to assume a genuine through liability for the whole transport covered by MT Contract.
The MT Convention, as the 1979 Protocol to the Hague/Visby Rules and the Hamburg Rules, acknowledges the system of monetary limits expressed in SDRs and provides for alternative levels of monetary limits depending upon whether or not a martime transport is involved in the combination of modes. The MT Convention also enables the claimant to claim a higher monetary limit where loss or damage can be localized to a stage of the transport where such higher limit applies.
The MT Convention gives legal recognition to the MT document, which is particularly important, when such document has been issued in a negotiable form.
Many national Governments have set up trade facilitation committees to simplify procedures and documentation and most of these participate in
international convention work to :
(a) rationalize international trade procedure.
(b) standardize information requirements and documents.
(c) reduce the number of documents required and
(d) develop standards for communication between the computer systems.
Since the traditional document for this purpose is the “on board” or “shipped Bill of Lading”, it is not possible to issue such bill of lading for containers stuffed elsewhere and at the same time some of the carriers used to issue Bill of Lading in a revised form “received for shipment” but banks are reluctant to accept this Bill of Lading. However, the Uniform Customs and Practice for Documentary Credits of ICC Banking Commission now includes and article, which says that shipping documents showing “Shippers load and count,” or “Said by shipper to contain “ will be accepted unless otherwise specified in the credit (ICC 400) article 25.
To obtain full advantages of the containerization, developing countries should consider adoption of “Customs Convention on Containers” and MT Convention. International policies need to be developed to break form the traditional customs examination and clearance at port of entry to the country. The introduction of international standards into the customs procedures should be done in accordance with the standards and recommended practices of KYOTO Convention on the simplification and Harmonization of Customs Procedures 1973 (UNCTAD) special progaramme on trade facilities.
Many attempts have been made to simplify and standardize customs formalities which otherwise may constitute a barrier to the Trade. First concrete result in this sphere obtained in the International convention for simplification of customs and other formalities held in 1923. The General Agreement of Tariff Trade 1947 (GATT) also contains certain provisions. In the European sector “Customs co – operation council” continued this work. But no fool proof methodology had yet been emerged.
Since MT convention are not customs conventions several other conventions were held in various part of the world. They are various TIR (Transport International Routier – International Road Transport) Conventions and Customs Conventions on Containers.
TIR Convention 1959 entered into force on 7.1.1980.
Convention on Transit Trade of land locked states 1965 entered into force on 9.6.1967.
TIR Convention 1975 entered into force on 20.3.1978
Customs Convention on containers 1956 came in force on 4.8.1959.
Customs convention on containers 1972 came in force on 6.12.1975.
Kyoto Convention 1973 came into force on 25.9.1975.
Indian Scenario :
As far as India is concerned, multi – modalism is still in its infancy. Firstly, the multi – modal transport operator has not yet been given the recognition and status which he has, in developed countries. Consequently, he is unable to issue a through document and accept responsibility for combined transport.
Even though India has attended the UN Convention on code of conduct for liner conference held on 27.6.1965 and 14.2.1978 it has not accepted or adopted any of the convention or conference on International Multimodal Transport of goods.
As per Shipping Lines, they still adhere to the “Port to Port” concept. Even where consignments are earmarked for delivering at inland, ICD’s the line normally declines to accept responsibility for inland/rail transport. The Railways on the other hand, also do not take any responsibility for the rail leg. Such being the case, it is essential that the RBI, the MTO’s and Shipping Lines sit around the table and formulate a combined transport document which will meet the needs of intermodal transport. The co-ordination between different segments of transport in this regard would make Multimodal Transport in India a reality.
It is understood that India is signatory of Kyoto Convention. Government of India, Ministry of Commerce has taken some action in consultation with the Director General of Shipping to prepare and adopt a Combined Transport Document acceptable to all agencies connected to the transportation of containers as per different modes of transport.
THE MULTIMODAL TRANSPORTATION OF GOODS ACT, 1993 (28 OF 1993).
AN ACT :
To provide 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.
Be if enacted by Parliament in the Forty – Fourth of the Republic of India as follows :-