The term multimodal transport has been defined by various scholars and organizations. According to the UNCTAD, “ ‘International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a 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…” (UNCTAD, 2001).
It is also defined as the, “a transport system usually operated by one carrier with more than one mode of transport under the control or ownership of one operator. It involves the use of more than one means of transport such as a combination of truck, railcar, aeroplane or ship in succession to each other e.g. a container line which operates both a ship and a rail system of double stack trains.” (United Nation2003).
The advantages of multimodal transport include minimizing the time lost at the transshipment points. A transport operator will maintain the communication links and will guide the interchange and the transportation of the goods at the transshipment points. Multimodal transport reduces the amount of documents that have to be filled and formalities that is required at each segment of the transport chain. Multimodal transport has also helped many importers and exporters to reduce the cost incurred during transportation of their goods.
Multimodal transport is important in all nations in today’s economy. At the international level, doubling of transport costs can reduce trade flows by more than 80%.Empirical evidence underlines that raising transport costs by 10% reduces trade volumes by more than 20% (Dr. Jean-Paul & Dr. Claude, 2011).
Today, traditional transport means are insufficient hence the need for multimodal transport. This paper will thus discuss whether improvements in the physical infrastructure or legal infrastructure are the best way to facilitate multimodal transport based on the above definitions.
Physical infrastructure: the need for physical infrastructure Improvement
Several physical infrastructure improvements are needed to help facilitate multimodal transport and logistics services in all countries. In present day, it has been accepted that there is need for containerization when it comes to transportation of merchandise. In multimodal transport, containers are the most used in while transporting goods.
Cargo that has been packed in containers requires less space and personnel at the ports and warehouses. Multimodal transport requires infrastructures such as port, road, and rail infrastructure (De Wit, 1995). If the infrastructure is lacking or poorly maintained then this hinders multimodal transport and makes it hard for the transport providers. Many developing countries lack the basic infrastructures and this has made it costly and at times impossible to transport merchandise.
For effective multimodal transportation, there is need for implementation and improvement of information and communication technology (ICT). Today ICT has helped to revolutionize how trade and transport is carried out.
Electronic communication are instrumental in exchanging timely and useful information, facilitate contracts signing and negotiations, and help in tracing goods while in transit. The transport providers and users use ICT facilities to exchange information. Therefore, multimodal transport will be affected or hindered if the ICT facilities are not implemented, maintained, and improved.
This calls for governments and the private sector to invest lots of resources in developing and installing these facilities if multimodal transport is going to be effective. Increased competition and participation from the private sector empirically tend to promote investments made in infrastructure and the ICT facilities. In efforts of improving the infrastructure, the governments can opt to invest funds in the construction and installation or they may concession the building and running of the infrastructure.
Legal infrastructure: Need for legal infrastructure in facilitating multimodal transport
In the modern days though much of international trade is done under one contract with one party taking the contractual responsibility and on a door-to-door basis, the present legal structure that governs multimodal transport does not mirror these advancements.
There is no international system that can regulate liability for instances of loss, delays that may be caused by multi modal transport or damage of goods in transit. Instead, the legal system that governs multimodal transport presently is made up of complex range of global conventions that are made to regulate unimodal carriage, the national laws, and the standard term contract.
As a result, we find that the liability rules and the liability that can be borne by the carrier will vary greatly in different cases and it is unpredictable. There have been various attempts made in trying to draft rules that would regulate liability that arises from international multimodal transport, although none of them has been successful in bringing international uniformity.
The United Nations Convention on International Multimodal Transport of Goods (UNCITRAL) was agreed on in 1980, but was enforced due to lack of ratification. Later in early 1990s, there was creation of a standard for contractual contracts. However, because these rules are based on contracts, it makes them hard to subject them to any mandatory law and this makes them ineffective in realizing international uniformity (United Nation, 2003 p.8).
Due to the lack of international uniform in liability regulation, there has been an increase in diverse countrywide, local and sub regional laws and policies that govern multimodal transport. For many developing countries, they have been forced to resort in creating solutions that address the regional level.
Such this laws have been prepared by the Andean Community, the Latin American Integration Association (ALADI), the Southern Common Market (MERCOSUR) and the Association of South-East Asian Nations (ASEAN). Though these laws have been based on the UNCTAD/ICC Rules they differ a lot on many key issues and theses has caused further “disunification” when it comes to the international level. If the legal system is complex and fragmented then it creates uncertainty.
This in turn causes increase in transaction costs because the legal and inquiry fees increase as well as costly litigation and insurance premium increases. Many of the legal propositions such as the Draft Instrument made in 2003, have been criticized for making it hard for the landlocked and developing countries to take advantage of the containerization and multimodal transport (United Nation, 2003 p.10).
For maximum benefits to be realized from modern technology in multimodal transport then there is need for a supportive legal system or framework. This system should recognize the legal effect and the validity of messages delivered electronically and thus aid in their use.
There have been steps made to remove these barriers with the best example being the adoption of UNCITRAL Model Law on Electronic Commerce (1996) and Model Law on Electronic Signatures (2001) by many countries. With the adoption of these models, governments can formulate internationally acceptable rules and principles for electronic commerce. Currently within UNCITRAL there is formulation of a Draft Instrument that will help remove legal barriers and allow the use of both electronic and paper documents.
For all countries the cost and quality of multimodal transport is significant for local and international trade. It is estimated that if the cost of transport is doubled then the growth rate of the economy will drop by more than half a percentage (United Nation, 2003 p.19).
In the present day, traditional transport services have proven to be inefficient and therefore there is need for implementation and improvement of the multimodal transport operations. These improvements can be focused in two areas, the physical infrastructure, and the legal infrastructure.
Although both improvements are important, the improvement that has greater impact on multimodal transport is the legal infrastructure. For most implementations and improvements to be done on the physical infrastructure then there is need for strong legal infrastructures to be in place. Legal structures helps in formulating how various strategies that will improve multimodal transport are going to be effected.
The cost of transport would drastically reduce if the complexity and fragmentation caused by uncertainty in legal system was addressed. This would help reduce the legal fee and inquiry fee as well as reduce the insurance premiums paid on gods being transported.
The cost and time taken to transport goods would greatly reduce if legal frameworks in different countries were harmonized. Clearing of goods at ports would take a shorter time and the paperwork involved in transport would be greatly reduced.
Improvements legal infrastructure is the best way to facilitate multimodal transport. This is because strong legal infrastructure in a country helps to formulate and direct plans on the various initiative and ventures a country undertakes. With strong legal infrastructure, a country can create laws that would help improve multimodal transport as well as direct resources in the improvement of other infrastructures.
De Wit, R. (1995). Multimodal transport: carrier liability and documentation. London: Lloyd London Press.
Dr. Jean-Paul, R., & Dr. Claude, C. (2011). THE GEOGRAPHY OF TRANSPORT SYSTEMS. Transport Costs. Retrieved from http://people.hofstra.edu/geotrans/eng/ch7en/conc7en/ch7c3en.html
UNCTAD. (2001). Multimodal Transport Handbook. Wellington: Ministry of Foreign Affairs and Trade.
UNESCAP, United Nations Economic and Social Commission for Asia and the Pacific. (2003, July). Multimodal Transport Operations. Retrieved from http://www.unescap.org/ttdw/CapBuild/PPT%20-%20Multimodal%20Transport%20Operations.pdf
United Nation, United Nations Conference on Trade and Development. (2003, July). Development Of Multimodal Transport And Logistics Services. Retrieved from http://www.unctad.org/en/docs/c3em20d2_en.pdf