Multi-Modal Transport & Applications

Multi-Modal Transport & Applications
Aswatha Nagendra

Multi-Modal Transport & Applications Agenda
Multi-Modal Transport Operator (MTO): Definition, Scope & Role Benefits Challenges Legal, Tax Implications & Documentation Performance Measurement Best Practices Effective Enablers

Modal Contribution Share of different modes of transportation in India and other countries Statisitcs of Services and pipeline are not part these statisitics Note: Europe: 2010 statistics, US: 2007 statistics, China: 2008 statistics and India: 2012 statistics; modal split is for freight transport turnover (BTKM); pipelines transportation is not considered in above analysis Sources: Europa Stat, US Department of Transportation, China Ministry of Transport, KPMG in India analysis Road and Rail transportation still dominates in other regions Source: KPMG

Transport Sector in India GDP Share of different modes of Transport in India 2010 Contribution of transport in India: Of the total share of transportation sector in GDP, contribution of Road Transport has been significant Railways contribution has come down over the years With the proposed dedicated freight corridor along the golden quadrilateral & its diagonals, would support the increase in freight volumes and its contribution to the overall Transport GDP Transport sector had contributed 6.5 % share to India’s GDP ($1.3 tn) in 2010 Source: CSO

Multi-Modal Transport Operator
Multi-Modal Transport & Applications MTO - Definition Multi-Modal Transport Operator The chain that interconnects different links or modes of transport – air, sea, and land into one complete 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, on one transport document. 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

MMT - Scope Multi-Modal Transport of Goods Act 1993 Company eligibility for registration as an MTO Relevant documentation procedures Legal framework and standards Key differences between multi-modal and inter-modal transport Main stakeholders involved and their roles

MTO - Role Shipper Regulatory Authority Multimodal Transport Operator Individual Contracts Truckers/Shipping Lines/Railways Ports/Airports CFS/LCD’s

MTO – Role (contd) Shipper is provided with one or more value added service in Multimodal Transport System MTO’s may provide following value added services: Consignee billing Logistical support for time sensitive products Inventory control Distribution Reporting Pickup-on-call for air freight Electronic tracking of shipments Delivery confirmation service

MTO – Role (contd) The multimodal transport sector is still nascent More competition is expected with growth Key differentiating factors for MTO’s quality of service Speed Door-to-door capability Reliability Security Safety Flexibility & Availability The multimodal transport sector is still nascent. With growth comes competition. The key differentiator among the MTOs would then be quality of service as indicated by factors like speed, door-to-door capability, reliability, security, safety, flexibility and availability

Multimodal Organization Types Vessel Operating MTOs Individual Shipping companies or groups of consortia of shipping companies Large exporters utilizing their own MTOs by engaging their chartered ships Non-Vessel Operating MTOs (NVO-MTOs) Freight Forwarders Road transport Operators Railways Airlines

Company/Firm/Proprietary concern
Multi-Modal Transport & Applications MTO - Registration Requirements Applicant Company/Firm/Proprietary concern Engaged in business of shipping or freight forwarding in India or abroad Must have a minimum annual turnover of Rs 50 lacs preceding Financial year OR Average annual turnover of Rs 50 Lacs during preceding 3 Financial Year’s Not engaged in business of shipping or freight forwarding in India or abroad Applicant/Partners/Proprietor Subscribed share capital not be less than 50 lacs OR Aggregate balance in its capital account not be less than 50 lacs Needs to have office, agents or representatives in 2 or more countries Applicant should be a company, firm or proprietary concern If the applicant is engaged either in the business of shipping or freight forwarding in India or abroad, it must have a minimal annual turnover of Rs 50 lacs during immediately preceding financial year or Average annual turnover of Rs 50 Lacs during preceding 3 financial years – Duly certified by a chartered accountant If the applicant is not in the business of shipping or freight forwarding in India or abroad then the subscribed share capital or aggregate balance in its capital account or that of it’s partners or proprietor should not be less than 50 lacs and the applicant has to have offices ,agents or representatives in not less than 2 other countries

Company/Firm/Proprietary concern
Multi-Modal Transport & Applications MTO - Registration Requirements (contd) Applicant Company/Firm/Proprietary concern Applicant not a resident of India and not engaged in the business of shipping Must establish a registered place in India Fulfill the other requirements Competent authority will grant the certificate to commence operations as MTO If the applicant is not the resident of India and not engaged in the business of shipping, he must establish a registered place in India The competent authority on being satisfied about existence of above mentioned credentials shall register the applicant as a multimodal transport operator and shall grant him a certificate to carry on or commence the business of multimodal transportation To get registered as multimodal operator person should fulfil requirements as highlighted in previous slide

FDI in Logistics and MTO in India
Multi-Modal Transport & Applications FDI Policy FDI in Logistics and MTO in India Automatic Route Government Route Investors do not require approval from RBI or GOI All activities which are not covered under automatic route can be done after FIPB approval FDI in logistics and MTO can be done in 2 possible ways in India (Automatic and Govt Route(Automatic route is where investors don’t require approval from RBI or GOI. Government route for all activities which are not covered under automatic routes can be done after getting FIPB approval which is mandatory)

Road Transport Most extensive network for domestic distribution Very small fixed investments compared to other modes of transport It is means for rapid industrialization and agricultural advancement Used to carry range of products both high and low value

Road Transport Road Network India has the 2nd largest road network spanning 4.7million kms. Carrying 60% of goods carried and 85% of total passenger traffic in India Investments Planning commission aims to spend 20% of $1 tn on road infrastructure during 12th five year plan Private Sector Private sector companies have emerged as key players in road infrastructure development in India

Road Transport Advantages Ease of availability Flexible operations Last mile connectivity Low cost for certain loads & distances Customized services Lower capital investment Disadvantages Limited Load carrying capacity Multiple check points Poor infrastructure Fragmented sector More expensive compared to rail & sea

Rail Transport Rail transportation has been the key contributor to domestic and international trade across the globe In India Rail freight is expected to reach 1 billion tonnes in 2013 Potential for freight movement remains largely untapped due to under investments Major products shipped include metals, fuel, small or large machinery etc

Rail Transport Rail Network India has the 4th largest rail network carrying 30 mn passengers on trains daily 975.2 mn tonnes of freight carried in FY12 Modernization/ Technology upgrade Introduction of mobile ticketing Current system up gradation to increase ticket booking capacity Private Sector Cabinet approval for private ownership of rail lines through “participative models for rail connectivity and capacity augmented projects”. Rail freight business in India contributes about 65% to the Indian Railways total revenues. However, rail share in freight traffic has fallen from 88% in the early 1950s to about 35 % currently in favour of road sector due to the former’s inherent disadvantages. The rail freight volumes have increased at a CAGR of 4.92% during to , increasing to million tons in from million tons in Industry Structure and Key Players: In India the rail freight is dominated by Indian Railways. It manages the bulk cargo movement on its own. The container movement, however, is managed by its subsidiary, Container Corporation of India (Concor). Container operations were opened for private participation in Since then, 16 private players have moved in, thereby reducing the market share of Concor to around 73%. Currently, Concor owns 62 terminals, another 10 are owned by private operators, while the development of 12 terminals is in the pipeline. Key Trends : Increasing containerisation Increasing penetration of Information and Communication Technology Increasing operational efficiency Market moves – JVs Key issues : Inadequate network Level-playing field for Private Container Train Operators – PCTOs : Cross-subsidisation of passenger fares Low speed of freight trains

Rail Transport Advantages Lower cost for the load that is dense & transported over long distances Economic mode for bulk movement Less check points between point of origin & destination Better accessibility in the difficult terrain as compared to road Disadvantages Inadequate and aging network Slower speed Dominance of govt. control Inadequate technology & automation Dependence on road for last mile connectivity Complex procedures & paperwork for booking

Dedicated Freight Corridor Dedicated Freight Corridor(DFC) is an marquee initiative by Indian Railways Envisages construction of two corridors spanning 3300kms Eastern Corridor from Ludhiana(Punjab) to Dankuni(WB) Western Corridor from Dadri(UP) to JNPT, Mumbai Need for Dedicated Freight Corridor Project The Indian Railways' quadrilateral linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, commonly known as the Golden Quadrilateral; and its two diagonals (Delhi-Chennai and Mumbai-Howrah), adding up to a total route length of 10,122 km carries more than 55% of revenue earning freight traffic of IR. The existing trunk routes of Howrah-Delhi on the Eastern Corridor and Mumbai-Delhi on the Western Corridor are highly saturated, line capacity utilization varying between 115% to 150%. The surging power needs requiring heavy coal movement, booming infrastructure construction and growing international trade has led to the conception of the Dedicated Freight Corridors along the Eastern and Western Routes.

Dedicated Freight Corridor – Plan

DFC Multi-Modal Transport & Applications
Dedicated Freight Corridor – Objectives DFC Segregate freight & passenger lines Increase rail freight share in modal mix Creation of additional freight capacity Unit cost reduction by speeding freight train operations Adoption of high end technology to track freight Objectives of DFC

The completion and start of DFC will bring a more balanced mode mix
Multi-Modal Transport & Applications DFC – A Game Changer The completion and start of DFC will bring a more balanced mode mix % share Projected 2020 From MCK DFC report With the completion and start of DFC the share of road transport freight is expected to gradually come down. The above graph show the projections based on expected addition to freight volume to DFC, to bring a more balanced modal mix. Source: Mckinsey

Marine/Water Transport Marine Transport is the traditional growth engine of trade An efficient and cost-effective mode of transportation Less time sensitive and large quantities of non-perishable cargo are shipped by this mode Products shipped can range from coal, fuel oil to electronic components Water Transportation - India has 12 major ports and 187 minor ports Cargo traffic at major Indian ports was 935 million tons in FY , yoy of 2.4%

Marine/Water Transport Indian ports serve as gateway to International trade With 12 major and 187 minor ports which contribute to 935mns of cargo traffic for Potential to increase the domestic freight share through inland and costal shipping A coastline of 7,551km and about 14,500km of navigable inland waterways can be utilized with more investment in developing infrastructure

Marine/Water Transport Key issues : Inadequate capacity Global competitiveness Lack of support infrastructure Cabotage laws

Marine/Water Transport Advantages Lowest cost as compared to other modes Can carry up to 500,000 DWT loads Most suitable for long haul and low cost commodities Disadvantages Slowest speed compared to other modes Accessibility and frequency may vary by routes Dependence on road for last mile connectivity Port congestion and capacity bottleneck may lead to delays

Marine/Water Transport: Costal & IWT India is blessed with 7,551km of coastline and about 14,500kms of navigable inland waterways This mode is more fuel efficient, environment friendly and more economical than rail and road This sector has remained largely untapped India transports only 7% of its domestic cargo by coastal shipping, or so-called short-sea shipping, while the European Union transports 42%, China 43% and the US 15% Inland water transport (IWT) accounts for less than a 1% share of goods transported within India

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

Air Transport Air Transportation supply chain increases the competiveness of global companies Cost of air freight services is around 4-5 times that of road and times of sea transport Perishables, pharmaceutical products, express mail and high value cargo General Introduction to Air Transportation Used for emergency as well as express cargo delivery. Overall air traffic in stood at 2.19 million tonnes (mt) in India. On the international front, the global economic slowdown has led to a decline in traffic. The domestic freight segment recorded a CAGR of 9.13% during the five-year period ( to ), while the international freight segment grew at a CAGR of 5.23% during the same period. Air transport’s share in Indian freight is less than 1% by volume since air freight is very expensive compared to road and sea transport. The cost of air freight services is around 4-5 times that of road and times of sea transport. Industry structure and key players: Airfreight industry consists of a supply chain which includes airlines, customs, ground services, air cargo forwarders, brokers, domestic transportation, air cargo terminals, distribution centres and integrated international express services. Of these air cargo terminals are critical in the air cargo supply chain. An air cargo terminal has three key users – airlines, air cargo terminal operators and forwarders/cargo agents. Four cargo airlines – Blue Dart Aviation Private Limited, Deccan Cargo & Express Logistics Private Limited, Fedex & Aryan Cargo Express Pvt Ltd operate scheduled cargo services in India. Key trends : Decline in international cargo due to global economic slowdown Shrinking profitability of airlines Joint ventures and consolidation of operations Volatility in international fuel prices Declining share of dedicated belly cargo

Air Transport Key issues pertaining the Air Transportation sector Infrastructure gaps Inefficiencies in operations High investment and operating costs Complex procedures and documentation

Air Transport Advantages Fast speed Suitable for high value products Most suitable for small or parcel loads, documents More reliable as compared to other modes Disadvantages High Cost (4-5 times of road and times of rail) Limited Load carrying capacity Dependence on road for last mile connectivity High investments & operating cost

Services Cost Continuum
Multi-Modal Transport & Applications Modal Choice Services Cost Continuum Higher Lower Water Air Cargo Rail Intermodal Rail Carload Rail Unit Truck Fastest Most Reliable Most Visible Fast Reliable Visible Slower Less Reliable Less Visible Road transport is the most preferred choice since it offers maximum flexibility in terms of consignment size matching vehicle capacity (Over-dimension consignment, trailor, truck (multi-axle, single axle), medium commercial vehicles, light commercial vehicles, tempo, van, hand-cart etc. Also, the last-mile delivery it offers helps in reaching smallest of towns in remote corners of India. It is generally cost-effective for short hauls and small loads. Air transport being used for emergency purposes (to avert stoppage of a production line or prevent loss of sale) constitutes only 10% of total air cargo movement globally. The balance 90% movement is the first choice when it comes to perishable cargo like flowers, fruits and select vegetables as also pharmaceutical products which have very limited shelf-like like some vaccines and life-saving drugs. Another category that qualifies for this express cargo movement are precious stones and jewellery wherein the freight cost is a miniscule percentage of the product price as also when the consignment size is small. Rail transport becomes a viable alternative when as a rule-of-thumb distances traversed are more than 500 kms and the cargo is bulk in nature ie. Constitutes a rake load eg. Cement, coal, oil , foodgrains etc. In case distances are short ie. Less than 500 kms, and/or the consignment is small (less than a rakeload), then not only the transportation cost in terms of Rs/t-km is more expensive by rail but also transit times tend to be longer compared to road. In addition multiple handlings (at rail-head) increases incidence of damages to the cargo transported. Water transport becomes an automatic choice when transportation of large quantities of non-perishable goods where urgencies are not involved. This is the traditional growth engine of trade and this mode provides an efficient and cost-effective mode of transport compared to all other modes. Bulk commodities like iron ore, coal, cement move in either cape-size (large) vessels or in medium size Panamax vessels or small-size handymax vessels. Alternatively, containerized cargo is an increasing trend worldwide and 23% of total cargo volume moving by sea goes via the containerized route. As regards coastal shipping, bulk products like cement move via this route from say Gujarat ports to ports in Karnataka, Kerala & Tamil Nadu wherein the lead distances are more than 500 nautical miles. Inland waterways are used in India for movement of bulk commodities like tea in Brahmaputra river in Assam or project cargo movement on Hooghly river. Pipeline transport happens to be the automatic choice when liquid transportation like various petroleum products or gases or slurries need to be transported across long distances. Pipelines operate on a 24-hour basis , seven days per week and are limited only by commodity changeover and maintenance. Pipelines have the highest fixed cost and lowest variable cost among various transport modes. High fixed costs result from the right-of-way, construction and requirements for control stations and pumping capacity. Since pipelines are not labour-intensive, the variable operating cost is extremely low once the pipeline has been constructed. To summarize, wherever capital expenditure budgets are not a constraint and the nature of products are liquid or gaseous in nature, then pipeline transport is the preferred choice. Lowest Weight Highest Value Most Time Sensitive Cargo Range of Weight and Value Rail intermodal competitive with truck load over long distances Highest Weight Lowest Value Least Time Sensitive Cargo

MTO - Benefits 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

MTO - Benefits (contd) Single Point Of Contact Reduces burden of documentation & formalities Saves time & cuts pilferage at the points of transhipment Makes the best of each mode Frees up working capital Better distribution of wealth

Multi-Modal Transport Operator (MTO): Scope & Role Benefits Challenges Legal, Tax Implications & Documentation Performance Measurement Best Practices Effective Enablers

MTO - Operational Challenges Increased Uncertainty Greater distances Longer lead times Decreased market knowledge Increased Variability Unique customer requirements Unique documentation requirements Different regulations across countries Currency fluctuations Shifting political environments

Multi-Modal Transport Operator
MTO - Operational Challenges Decreased Control Extensive use of international service firms Potential customs requirements Trade restrictions by governments Decreased Visibility Longer transit times Longer holding times Less ability to track shipment locations

Macro Challenges Infrastructure Development Regulatory Reforms Investment in Technology

Other Challenges Infrastructure Development Containerization Dry ports (CFS/ICD) Port Sector Inland waterway Road transportation

Other Challenges 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

Other Challenges Investment in Technology Cloud computing and software-as-a-service Global Positioning System Radio Frequency Identification Enterprise Resource Planning Mobile Technology

Multi-Modal Transport Operator (MTO): Scope & Role Benefits Challenges Legal, Tax Implications & Documentation Performance Measurement Best Practices Effective Enablers

Legal Framework 1930 1st made by UNIDROIT 1980 Multi-modal transport term introduced by UN 1992 Legal recognition for term under UNCTAD/ICC rules 1993 MMTG act enacted in India 2002 Act amended to simplify rules Act provides registration for 3 years at a time which can be renewed for a further period of 3 years Director General of shipping is the competent authority Legal Framework First made by international institute for the unification of private law(UNIDROIT) in 1930 Term Multimodal transport first introduced by UN in 1980 Term attained legal recognition on 1st jan 1992 through introduction of 1992 UNCTAD/ICC rules for multimodal transport In India multimodal transportation of goods act 1993 enacted-Provides for a registration of person as multimodal transport operator Act amended in 2002 to simplify procedures Director General of shipping notified as competent authority to perform functions under the act including registrations of multi modal operator Act provide registration for 3 years at a time which can be renewed for a further period of 3 years

GST Multi-Modal Transport & Applications Tax Implications Excise
Sales Tax Value Added Tax Octroi Customs Duty Tax implications In the light of GST coming in , consolidation of services will be a fallout resulting in increased availability of efficient and organized service providers Reorganized country wide networks would decrease cost of primary freight since warehousing locations are likely to be placed closer to manufacturing/import/export location Consequently this would increase secondary freight due to consolidation of warehouses GST will subsume various taxes like excise ,sales tax, VAT, Octroi, Customs duty etc which will make multimodal transport arrangements more tax efficient due to elimination of cascading effect of taxes GST will subsume various taxes which will make multimodal transport arrangements more tax efficient

Tax Implications Services consolidation will increase availability of efficient and organized service providers Reorganized country wide networks decrease cost of primary freight Increased secondary freight due to consolidation of warehouses Eliminate cascading effect of taxes Tax implications In the light of GST coming in , consolidation of services will be a fallout resulting in increased availability of efficient and organized service providers Reorganized country wide networks would decrease cost of primary freight since warehousing locations are likely to be placed closer to manufacturing/import/export location Consequently this would increase secondary freight due to consolidation of warehouses GST will subsume various taxes like excise ,sales tax, VAT, Octroi, Customs duty etc which will make multimodal transport arrangements more tax efficient due to elimination of cascading effect of taxes

Multi-modal transport document (MTD) Multimodal transport document(MTD) is the accepted document whenever two or more modes of transport takes place from the acceptance of goods in India through the place of delivery of goods outside India 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, Issued in a negotiable form or, Issued in a non-negotiable form indicating a named consignee” United nations conference for trade and development (UNCTAD)/ICC Rules for Multimodal Transport Documents:

Multi-modal transport document (MTD) By issuance of MTD, the MTO: Undertakes to perform and/or in his own name to procure performance of the multimodal transport including all services which are necessary to such transport for the time of taking the goods in charge to the time of delivery, and accepts responsibility for such transport and such services to the extent set out in this conditions Accepts responsibility for the acts and omissions of its agents or servants when agents/servants are acting within their scope of environment as if such acts or omissions were owned Either a case & details of each pt

Multi-modal transport document (MTD) By issuance of MTD, the MTO: Accepts responsibility for the acts/omissions of any other person whose services he uses for the performance of the contract evidenced by multimodal transport document Undertakes to perform or to procure performance of all acts necessary to ensure delivery Either a case & details of each pt

Multi-modal transport document (MTD) By issuance of MTD, the MTO: Assumes liability to the extent set out in these conditions of loss or damage to the goods occurring between the time of taking them in charge and the time of delivery and undertakes to pay compensation as set out in these conditions in respect to such loss or damage Assumes liability to the extent set out in these conditions for delay in delivery of goods and undertakes to pay compensation as set out in that condition Either a case & details of each pt

Evidentiary Effect of MTD The MTD shall be prima facie evidence of the taking in charge by MTO of the goods as described therein Proof to the contrary by the MTO shall not be admissible if the MTD is issued in negotiable form and has been transferred to the third party , including a consignee, who has acted in good faith in reliance on the description of goods there in Replace with Exmple

Responsibilities and Liabilities of MTO MTO’s remain responsible for the goods throughout the period from the time they receive the consignment until the same is delivered MTO’s shall be liable for loss resulting from Any loss or damage to the consignment Delay in delivery of consignment and consequential loss or damage arising from such delays MTO’s shall not be liable if he proves that no fault or neglect on his part or that of his agents had caused or contributed to such loss/damage or delay in delivery

Responsibilities and Liabilities of MTO 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 SDR per package or unit lost or damaged whichever is higher Notice of Loss/Damage to goods Notice shall be given by the consignee in writing to the MTO immediately if the losses are apparent However if the loss/damage is not apparent such notice shall be given within 6 days from the date of delivery

Responsibilities and Liabilities of MTO Limits of Liabilities If no sea or inland waterways leg is involved in transit then the limitation is based solely on weight i.e SDR/Kilo of cross weight of goods loss or damaged If the stage of transport at which the loss of damage occurred is known the limit of liability of MTO shall be determined in accordance with the provision of relevant law or convention governing limitation of liability Notice of Loss/Damage to goods Notice shall be given by the consignee in writing to the MTO immediately if the losses are apparent However if the loss/damage is not apparent such notice shall be given within 6 days from the date of delivery

Responsibilities and Liabilities of MTO Notice of Loss/Damage to goods Notice shall be given by the consignee in writing to the MTO immediately if the losses are apparent However if the loss/damage is not apparent such notice shall be given within 6 days from the date of delivery Limitation on Legal Action The MTO shall not be liable under any of the provisions of the act unless legal action against him is brought within 9 months of: The date of delivery of the goods The date when the goods should have been delivered The date on and from which the consignee has the right to treat the goods as lost

Multi-Modal Transport Operator (MTO): Scope & Role Benefits Key Challenges Legal, Tax Implications & Documentation Performance Measurement Best Practices Case Study Effective Enablers

Performance Measurement Till today, No inter-sectorally (between rail, road, ocean, inland waterway and airport transport) accepted concept for measuring and evaluating the performance of different transport mode is available Individual KPI’s of each mode of transport is monitored separately in terms of, Transit-time Cost Safety Security Visibility

Multi-Modal Transport Operator (MTO): Scope & Role Benefits Key Challenges Legal & tax matters Performance Measurement Best Practices Effective Enablers

Best Practices Parcel case strapping Multiple parcel orders for the same customers are strapped and shipped to the customer as single shipment It reduces cost due to optimal weight/cube bracket Shipments that are too light and small and fall outside these brackets are more expensive if shipped independently Parcel/LTL minimum charge analysis Parcel cost and LTL minimum charges are compared for each shipment and shipped using the cheaper mode

Best Practices (contd) Parcel Zone Jumping Shipments to expensive zones shipped at a lower cost by combination of truckload and parcel Parcel shipments to the same zone are consolidated and shipped via truck load to the zone Cross-docked and delivered to customers via the parcel shipments 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

Best Practices (contd) 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

Best Practices (contd) Continuous Move Routing This practice helps convert partial truck loads to full truck loads and minimizes empty running Instead of going from point A to point B and back to point A continuous move routing builds routes such as A to B to C and ultimately back to A The interim stops can be either for making customer deliveries or picking up loads

Multi-Modal Transport
Impact of Best Practices 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.

Impact of Best Practices Carriers and Private Fleet Will help to minimize empty running and gain incremental revenue with same distance covered Substantial impact on bottom line there by providing organizations an opportunity to reduce cost-to-serve and lane rates Modal optimization will also help reduce carriers and private fleet cost-to-serve, improve asset utilization and lower capex needs Carriers and private fleet will also be able to meet their sustainability goals

Impact of Best Practices 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

Building World Class Multimodal Transport Network Assess current or as-is scenario Evaluate alternate options available in market place Select the right mix through optimization Review performance through close monitoring of KPIs Use optimization as an ongoing process

Multi-Modal Transport Operator (MTO): Scope & Role Benefits Key Challenges Legal, Tax Implications & Documentation Performance Measurement Best Practices Effective Enablers

Effective Enablers Highly skilled expertise (commercial contract and maritime law, International freight forwarding, banking and insurance etc.) and extensively developed use of IT and carrier network Regulatory frameworks that can provide freedom to plan and operate to carriers and reliable liabilities regimes to customers Simplified customs administrative procedures and practices at ports and border points between countries to minimize and eliminate delays Efficient ports with excellent ship turnaround times, high standards for safety and security of cargo and ships, and high cargo productivity

Effective Enablers Effective and efficient security and safety along the entire transport chain (Intra and Inter Modes) Strong regional co-operation with dedicated political will to develop, enact and implement legal regimes that favour multimodal transportation Good road, rail, water and air transport infrastructure and super structure on a national and regional basis

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