CHAPTER 11: INTERNATIONAL LOGISTICS

Intermodal Transport
Intermodal shipping is when your shipments are handled by several different shipping companies.
Intermodal is defined as the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport carrier responsible, each with
its own independent contract.
Multiple carriers during a single journey. Each leg of the shipment is be handled by a separate
transport carrier. The Shipper will have several contracts, one with each transport carrier to handle
their specific leg of the shipment.
Let us say that you need to move a large amount of cargo to another site. Both of these sites are
land locked and on different continents. This could mean in order to move your cargo, you will
contact a trucking company to transport your shipment to a rail yard. Once at the rail yard, you
will move your cargo to a shipping port. The cargo will be loaded on to a ship and moved overseas
to another port- where it will be unloaded and moved to another rail carrier. Finally the shipment
will be trucked from the rail yard to your destination location.
Advantages of Intermodal transportation are associated with:
i. Shippers can choose carriers to take advantage of lower rates for each transport leg
ii. Gain flexibility and specialized handing of loading and unloading goods at different ports
iii. Reduce their carbon footprint by choosing environmentally friendly carriers
iv. Increased security of the products being transported
v. Shippers have more access to equipment and can better control capacity and selection of
transit schedules.
Multimodal Shipping
Multimodal is defined as the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport carrier responsible, however
under a single contract or bill of lading.
The same transport carrier is responsible for moving the shipment in all legs, in all modes. In
simple terms, Multimodal is using various modes of transport but with one transport bill of lading.
The differentiation between multimodal and intermodal lies in the contract/ bill of lading and
transport carrier responsibility / liability of the movement.
If we look back to our example above, multimodal shipping would be where one company or one
contract would handle all legs of the journey. This means that the same company is going to
responsible for moving your shipment in all legs, in all modes.
This can be set up in a couple of ways. You could go with a company that has all of these modes
of transport available to them. Another way to set up a single contract for yourself is to use an
agent. An agent would do all the negotiation on the back end for you while you only have one
contract to keep track of. The agent would also be responsible for coordinating loading, unloading,
and delays.

Advantages of Multimodal transportation

Minimizes time loss at trans-shipment points: Multimodal transport operator maintains its
communication links and coordinates that interchange onward carriage smoothly at transshipment
points.
Provides faster transit of goods: The faster transportation of goods is made possible under
Multimodal transport reduces the disadvantages of distance from markets and the typing-up of
capital.
Reduces the burden of documentation and formalities: The burden of issuing multiple
documentation and other formalities connected with each segment of the transport chain is reduced
to a minimum.
Saves cost: The savings in money from costs resulting from these advantages are usually reflected
in the through freight rates charged by the Multimodal transport operator and also in cargo
insurance cost.
Establishes only one agency to deal with: The consignor needs to deal with only the Multimodal
transport operator in all matters relating to goods, or delay in delivery of goods at destination.
Reduces cost of exports: The inherent advantages of Multimodal transport system will help to
reduce the cost of exports and improve their competitive position with pricing in the international
market segment.

Criteria in Selecting modes of Transport

Shipping quantity
When shipping quantities are reduced, air transport is usually the best option, while the stowage
factor was low, weight high. So much so, that air transport is the most widely used for shipping
commercial samples and low quantity product shipments that do not warrant the use of another
mode of transportation. However, when the amounts are important, it can be hard to use air freight,
even if the value of the merchandise is high. On many occasions, air freight often costs 5, 7 or
even 10 times more than what maritime freight costs, a reason for which it is not always a viable
alternative.
Urgency of the Buyer
In today’s market, customers value service, and delivery speed is a critical attribute of any
supplier. For this reason, air transport tends to address this aspect. In the case of transport of spare
parts, drugs, and other goods that tend to be needed immediately, air transport has the greatest
advantages over other options. Ground transport can provide a rapid turnaround when the distance
is short, but the response time is not as quick as air transport.
Risks one is willing to assume
With respect to the risks, air transport is the safest, and when the aim is to cover the highest number
of eventualities, it becomes the best alternative. Maritime transport is also safe when full container
(FCL) are used, although the risks are still much higher than air transport. Ground transport
represents the greatest risks, in particular, railway transport (though this always depends on the
management of the railway in each country, which tends to be deficient in the developing world).
Cost of Service:
The cost of transportation adds to the cost of the goods so it should always be kept in mind. Rail
transport is comparatively a cheaper mode of transport for carrying heavy and bulky traffic over
long distances. Motor transport is best suited and economical to carry small traffic over short
distances. Motor transport saves packing and handling costs.
Water transport is the cheapest mode of transport. It is suitable to carry only heavy and bulky
goods over long distances where time is not an important factor. Air transport is the most costly
means of transport but is particularly suited for carrying perishable, light and valuable goods which
require quick delivery.
Speed of Transport mode
Air transport is the quickest mode of transport but it is costliest of all. Motor transport is quicker
than railways over short distances. However, the speed of railways over long distances is more
than that of other modes of transport except air transport and is most suitable for long distances.
Water transport is very slow and thus unsuitable where time is an important factor.
Flexibility
Railways, water and air transport are inflexible modes of transport. They operate services on fixed
routes and at preplanned time schedules. The goods have to be carried to the stations, ports and
airports and then taken from there. Motor transport provides the most flexible service because it is
not tied to fixed routes or time schedules. It can operate at any time and can reach the business
premises for loading and unloading.
Safety:
Safety and security of goods in transit also influence the choice of a suitable means of transport.
Motor transport may be preferred to railway transport because losses are generally less in motor
transport. Water transport exposes the goods to the perils of sea and, hence from safety point of
view, sea transport is thought of as a last resort.
Nature of Commodity:
Rail transport is most suitable for carrying cheap, bulk and heavy goods. Perishable goods which
require quick delivery may be carried through motor transport or air transport keeping in mind the
cost and distance.
Accessibility
This primarily deals with the ease of getting. Boarding a vehicle. If a mode is not easily accessible
then it loses its usefulness because of its unavailability in a certain condition.
Integration with other modes
For long trips or trips which requires change of mode this factors becomes most significant for
completion of the trip. In case the selected mode is not integrated with other modes than the trip
will never get completed. In some cases to overcome the problem of integration a heavy cost will
be incurred to complete the required trip.