What is The Importance of Multimodal Transportation in Global Trade 5 Points to Note

Keywords: Multimodal Transportation, Sea Railway

Shippers all over the world begins to choose multimodal transportation, and for many reasons, the multimodal transportation solution has many advantages and huge benefits that make its use of great benefits. In this article, we will show you everything you want to know about multimodal transportation, and how it can be Neptune Logistics helps you connect business and multimodal transportation.

It’s important for shippers to optimize routing and total shipping costs before set sail. Sometimes a combination of different transport carriers is the best to achieve the total shipping cost. However, that means more logistics coordination. On the other hand, a single carrier may achieve the best routing and requires less paperwork – it is called Multimodal Transportation. Choosing what to use also depends on the nature of your cargo. In this piece, we’ll give an insight on what to choose for your next shipment.

1. What is Multimodal transportation?

Multimodal transportation (or combined transport) as per definition is a combination of at least two or more different modes to move your cargo from one country to another. The main characteristic of multimodal transport is that even though it includes various modes of transportation, it still falls under one single bill of lading. That means the carrier is fully liable for the entire carriage even though it’s performed by different modes of transport such as Air, Road, Railway, or Sea.

2. Pros and cons of multimodal transportation

Multimodal transportation is efficient in many ways but as a shipper, you must know the advantages and disadvantages. This will help you understand your requirements better and make informed decisions. Let’s have a quick glance at some of the pros and cons:

Pros of multimodal transportation (3O1R):

· ONE DRI There’s a centralization responsibility, mainly of the logistics provider. One carrier is liable for the entire movement

· ONE STOP There’s a decrease in coordination expenses of a shipper. The combination of different means of transport makes the delivery faster.

· ONE CONTRACT Having one single contract is more practical and requires less logistic effort from the sender

· REDUCE COSTS Reduce transportation costs, reduces costs in monitoring goods and provide greater security in tax collection, and facilitate trade development.

Cons of multimodal transportation:

Despite the many facilities and advantages represented by the use of multimodal transport, it has some disadvantages, such as:

· High requirements to ensure security due to constant inspections by the authorities at stations or other roads.

· Certain restrictions of a legal and operational nature due to differences in international standards.

· A certain ignorance of new technologies may occur in the transportation region.

3. Is Multimodal better for you?

While moving your cargo from one place to another, it’s important to choose the best transportation route, in order to get the deliveries from door to door. This is when the choice between multimodal and intermodal transportation comes to play.

Understanding the difference between the above two is important when choosing a carrier for your cargo. However, many times, these terms pose confusion and are used incorrectly or interchangeably. To make your understanding easy and simple, let’s dive in and have a quick glance at the key difference between Intermodal transportation and Multimodal transportation.

· Contract

Intermodal transportation sees each mode of transportation as a different contract. Multimodal transportation is a derivative that combines various modes of transport under a single contract.

That means, under intermodal, the product or container’s responsibility moves from one hand to other, making it challenging to maintain strict control over quality. multimodal has the advantage of keeping the freight under control.

· Flexibility

Intermodal transportation allows the carrier contractor to choose the best of each mode of transportation. In multimodal transportation, the freight processing is provided to the contractor based on the carrier’s solution.

· Delay and Overhead

In terms of overhead and delay, the contractor should keep track of every delay and complications, in each transportation mode. One mode of transportation will not have complete information about the following complications and delays in the next sector. However, in terms of multimodal, the entire process is under the control of one service provider, which gives ease to the contractor.

· Cost

Intermodal transportation deals with multi-contracts for each mode of transportation, which increases the overall cost. Multimodal transportation, the operation cost of setting up such a service is an overall package that cost-efficiency.

· Insurance

In the case of multimodal transportation, which the insurance will cover every mode of transportation. The overall insurance can provide better safety and security of transportation. This overall insurance concept is quite applicable.

· Speed vs. Cost

Multimodal transportation is efficient in terms of speed and value. Compare to intermodal transportation, multimodal transportation is cost-efficient, the pressure and complexity of intermodal routing and creating a combination of transportation modes transferred to carrier.

4. Multimodal transportation with example

In order to facilitate your understanding, let’s come to an example of multimodal transportation.

For instance, take a freight between Jakarta to Moscow under multimodal transportation. After the cargo is packed in the containers, the carrier sends their own designated trucking company to pick up the containers in Jakarta. It then brings it to the Merak Port. Once it reaches Merak, it’s again shipping to a Sea-rail-transhipment port. The cargo will be delivered by railway directly to Moscow. Then destination by the trucking company that works under the carrier.

The carrier takes full responsibility from the loading port to the final destination. The whole process needs only one contract.

5. What types of transport can be combined in multimodal shipping?

You can combine different means of transportation depending on your cargo route and time. For faster shipments, by air is convenient, while intercontinental shipments might involve sea freight. The most commonly used types are shown below:

Sea + Railway

Sea + road

Road + Railway

Sea + Railway + Road

For further supply chain, transportation solutions, and inquiries please contact us at:

Email: enquiry@nep-logistics.com

Phone: 0065 67219386

WhatsApp: 0065 98560336

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