Responsibilities of Multimodal Transport Operators

-
The responsibilities of Multimodal Transport Operators (MTOs) are many and here are some illustrations:

MTOs Liability

The MTO:
  • contracts with shipper to move the cargo from one point to another,
  • on a single transport documentation,
  • accepts responsibility for goods in transit,
  • may subcontract some or all transport tasks,
  • takes over risks for the entire transport chain.
MTO Liability in Loss or Damage. In event of loss and damage:
  • cargo owner is entitled to claim against MTO,
  • according to the agreed terms and conditions in the MT documentations,
  • in practice, the owner will demand compensation from the insurer,
  • insurer claims against MTO or its liability insurers.
MTO Liability - Options:
  • uniform liability - single liability; regardless of where damages occurred;
  • network liability - varying limits; depending on applicable limits; for underlying modes of transport.
Network Liability System

This liability system incorporates:
  • precise rules to each transport mode
  • if loss or damages can be localized
  • limits of liability are applicable to the mode used
  • specific reference to a particular convention must be specified in the Multimodal Transport Documents (MTD).
UNCTAD/International Chamber of Commerce (ICC) rules for MTD
  1. Convention chaos
  2. Interim solution is required
  3. UNCTAD/ICC rules replace outdated ICC rules for MT
  4. New rules provide solution to MTO liability challenges
  5. UNCTAD/ICC rules can be with Hague Rules; Hague-Visby Rules; Hamburg Rules; Applied by reference in MTD.
UNCTAD/ICC Rules for MTD
  1. a number of definitions
  2. evidentary effect on MTD
  3. set limitations of MTO's liability
  4. notice period of 6 days
  5. time-bar is 9 months
  6. applicable to tort action and agents
  7. subject to mandatory national law
MTD's Liability

The UNCTAD/ICC Rules:
  • allow both negotiable and non-negotiable MTD
  • place burden to proof loss/damages to the goods on the MTO
  • unless MTO can prove itself not responsible
  • Hague Rules - defences: errors in navigation; management of ship; fire; limit MTO liability unless national law sets other limits.
Maritime Liability Regimes
  1. Main leg of MT is normally by sea
  2. Ocean carrier's limit are governed by the Hague Rules; Hague-Visby Rules; Hamburg Rules; and the National Law
  3. Ocean carrier's limits of liability are set out in the Bill of Lading.
Liability Insurance - P&I Club
  • any party will become liable for damage needs insurance cover
  • ocean carriers use P&I club membership
  • MTO must also protect themselves
  • the best option is to join the Truss Transport Club
  • a club of container handlers
  • or by insuring at reputable or exclusive insurance company.
A few statements of fact:
  1. the MTO relies heavily on subcontractors
  2. management and control from a distance is complicated
  3. essential that MTO has adequate liability insurance
  4. to engage with an understanding liability insurer.
Liability insurance - Subcontractors
  1. The MTO or liability insurer must try to recover loss from liable subcontractor
  2. Provided it can be proven where damage took place
  3. Sub-carrier's liability insurer will reimburse MTO's liability insurer
  4. When no insurance it would be impossible to recover any losses or damages.
Insurance Guarantee

Insurance is a guarantee of protection if something happens. Liability insurance for MTO is to safeguard its business and customers' cargo and it also serves as an assurance to customers of MTO's credibility and trustworthiness.

MTO/Customer Relationship

MTO needs liability insurance for its own security and the security of its customers as well. The insurance consist of varying modal limits which are also based on different conventions and local rules and regulations.

The challenges are the applications for such insurance are often a nightmare for MTOs. Liability covers with a liability insurer.

Recourse Action

Localized Loss or Damage:
  • often uncertain MTO can recover from sub-carriers
  • particularly in cases between different transport modes
  • with non-localized loss/damage liability rests with MTO alone
Loss/Damage
  • Localized damage: possible to determine where loss or damage occurred
  • Non-localized damage: Not possible to determine were loss or damage occurred

Popular posts from this blog

Definition, nature and purpose of a Documentary Credit

-
Article 2 of the Uniform Custom and Practice for Documentary Credit defines a documentary credit as: "For the purpose of these articles, the expression documentary credits and standby letters of credit (hereinafter referred to as credits ) means any arrangements, however named or described, whereby a bank (the issuing bank) acting on request and on the instructions of a customer (the applicant) or on its own behalf: is to make a payment to or to the order of a third party (the beneficiary) or is to accept and pay bills of exchange (drafts) drawn by the beneficiary, or, authorizes another the bank to effect such payment or to accept and pay such bills of exchange (drafts) or, authorizes another bank to negotiate, against stipulated documents, provided that the terms and conditions of the credit are adhered with". In a layman language, a documentary credit may be describe as a legal undertaking in writing. It is issued by the customer's bank (also known as the issuing ba
Read more

Bills of Lading

-
Image
A bill of lading is a document issued by a carrier to a shipper, signed by the captain, agent or owner of a vessel, furnishing written evidence regarding receipt of the cargo, the conditions on which transportation is made (contract of carriage) and the engagement to deliver goods as the prescribed port of destination to the lawful holder of the bill of lading. A bill of lading is, therefore both a receipt for the merchandise and a contract to deliver it as freight. There are a number of different types of bill of lading a number of issues that relate to them as a group of documents. Straight Bill of Lading (Non-Negotiable) A straight bill of lading indicates that the shipper will deliver the goods to the consignee. The document itself does not give title to the goods (making it non-negotiable). The consignee need only to identify himself to claim the goods. A straight bill of lading is often used when payment for the goods has already been made in advance or in cases where
Read more

Various Basic Shipping Charges on Landside and Waterside

-
Landside Stevedoring - cargo handling charges for loading / discharging cargo on / from conventional breakbulk vessels. LCL Service Charge - charge for stuffing and unstuffing LCL (Less than Container Load) cargo into or from a container at the freight station. Equipment Transfer Charge (ETC) - charge for lifting an empty or loaded container onto / from the trailer. Also called Lift-on / Lift-off (LOLO) charge. This charge is applicable on FCL (Full Container Load) containers only. Terminal Handling Charge (THC) - charge for handling (receiving and delivering) FCL containers at the container yard (CY). Waterside Bunker Adjustment Factor (BAF) - surcharge for offsetting changes in fuel prices. Congestion Surcharge - surcharge levied on cargo that are discharge at a port where ships are experiencing delays in turnaround time. Currency Adjustment Factor (CAF) - surcharge for offsetting fluctuations in currency exchange rates of various currencies against the US Dollar. In Asia and Japan t
Read more