International Transport Law :Carriage of Goods through Multimodal Transportation in Supply Chain Management

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 enables achievement of the followings: - 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 costeffective 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 chain- important 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 door-todoor 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 charterparties. 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.