Many businesses involved in international commercial activity have almost certainly encountered a situation in which the delivery of goods by a certain mode of transport is too expensive. Fortunately, in such instances, multimodal transportation of goods is an option. However, how is this mode of transportation organized? What are the primary characteristics of this mode of transport? And what are their advantages? We will find the answers to these questions in the following section.
Multimodal transportation is defined as transportation that uses many modes of transport but is regulated by a single contract. It makes no difference what mode of transport is used - rail, river, road, and so on.
Intermodal transportation is defined as transportation that uses many modes of transport and in which the customer may contract with multiple companies. In the case of intermodal transport, there may be many types of transport, and responsibility is allocated equitably among all participants.
Multimodal and intermodal transportation are very similar to each other, but there are also differences:
- In multimodal transport, it involves only one company in the transportation process, but in intermodal transport, the customer engages with several companies separately.
- Responsibility for intermodal transportation is distributed among all participants in the transportation of goods. Because of this, for example, in the event of damage to any goods, it is very difficult to find the culprit.
- For multimodal transportation, usually, one general package of documents is drawn up for all goods; in the case of intermodal, the difference is that you need several packages of documents (for all participants in the carriage of goods).
International multimodal transportation is handled by a single transport document known as a bill of lading. Transportation is provided by a single carrier, known to as the multimodal transport operator (MTO), and payment has been made on a flat through rate.
The operator is responsible for the following functions:
- Creates a route plan.
- Contracts with actual carriers are concluded.
- Calculated using real carriers to complete the operation.
- At all stages of transportation, takes full responsibility for the goods delivered to the customer.
- Transports and manages (sea, rail, road and so on).
- Contracts for the leasing of specialized terminals.
- Handles customs clearance and shipping document execution.
- Performs various other functions (audit, leasing, and so on).
Typically, multimodal container transportation is organized as follows:
- A customer's request to a multimodal transportation company. The customer must possess the necessary documents (information about the customer, documents for all goods, and so on).
- After that, a representative of the company inspects the cargo, verifies the documentation, and plans out the route. Additionally, the cost of all necessary services is calculated.
- The customer signs a contract with the company, and the carrier gets all goods.
- After that, the goods are transported as planned.
It's important to note the following features of multimodal transportation:
- The customer provides accurate information about the shipment to the company (type of goods, their weight, volume, and so on). The executing company may perform an independent inspection to verify the information provided by the customer. If it is found that the customer provided false information about the shipment, they will be fined.
- MTO is fully responsible for the goods' safety and integrity.
MTO also guarantees on-time delivery of the goods. MTO reserves the right to end the delivery with a force majeure situation. To do this, they deliver the cargo to the owner, and after they have delivered all of the goods, the delivery is complete.
- If it has been over 90 days since the customer was supposed to receive the cargo under the contract, the cargo is lost.
- The customer has the right to get information about all contractors involved in the transportation from the general contractor.
- The contract's text must provide specific information on the cost of the work. If the cost of the work is not specified exactly, additional agreements must be made to determine the costs. Additionally, you should pay attention to the scheduling of these projects, since failing to fulfill deadlines allows the customer to claim just financial compensation.
- Generally, such modes of transport are used when there is no direct communication between the supplier and the recipient of the goods. Additionally, such transportation may be required if delivery via one mode of transport is too costly or takes an extended period of time.
The executing company performs several operations during the cargo transportation stage, such as the preparation of associated documents, the search for and conclusion of contracts with actual carriers, the leasing of terminals, and customs clearance of goods.
Multimodal transportation has the following advantages:
- Reduced costs. The customer enters into a single arrangement with a single company, rather than many agreements with multiple companies, which allows you to minimize costs.
- Reducing delivery time. If the customer is responsible for freight delivery on his own, he will need to negotiate with several companies. When multimodal transportation is used, delivery is managed by the contractor, not the customer.
MTO will independently find and negotiate with all parties involved in the transportation of goods (many MTO have preparatory agreements with the actual performers), which will save you considerable time.
- Optimization of freight transportation. In some cases, transporting goods from point A to point B via a single mode of transport is too costly. Multimodal transportation enables the route to be divided into several segments so that goods are delivered by a variety of modes of transport, which not only saves money but also expedites the delivery of goods.
- Security. The performer is completely responsible. If the contractor provides the damaged goods to the recipient, the contractor must compensate the recipient fairly.
- There is no need to create many documents. The customer is only required to gather one packet of documents and deliver it to the contractor. Of course, additional documentation may be necessary for shipment, but in the majority of instances, MTO handles the preparation of this documentation.
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Firstly, multimodal transportation is defined as transportation that uses many modes of transport under a single contract.
Secondly, the executing company organizes and manages transportation, plans a route, and handles the creation of shipping documentation, and so on.
Finally, the major advantages of such transportation are safety and low shipping costs.
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