You must’ve come across the term ‘multimodal transport operator’ or MTO. But do you know what it stands for? This piece gives you all the information you need to understand this fancy but simple term. Read on to understand its benefits, what it means to your business, and who you should approach to get your hands on MTO.
In this blog, you’ll learn:
- Multimodal transportation requires only one Bill of Lading, although it involves multiple modes of transportation such as air, rail, road, and sea.
- A multimodal transport operator license plays a key role in the Indian shipping business.
- It’s mandatory for a shipping company or a freight forwarder to register under the Multimodal Transportation of Goods Act, 1993.
- You can only transport your goods from and to India through multiple modes of transportation if you are a registered MTO.
- You can increase your transparency among other members on xChange and find containers easily if you’ve got an MTO license.
Did you know 85% of the global trade is accomplished by sea? This means if you’re shipping via sea, your shipping process will involve a number of partners. Considering this, it’s essential you have more transparency throughout the process to increase trust, reliability, and responsibility among everyone involved. This is where the term ‘multimodal transport operator’ (MTO) becomes important. But before we delve more into it, let’s first understand its meaning.
What does multimodal transport mean in the shipping industry?
Multimodal transportation is the method of transporting your cargo from one location to the other using at least two or more different modes of transportation.
One thing you should keep in mind is that in this method, there’s only one bill of lading, although multiple modes of transportation such as air, rail, road, and sea are involved. Multimodal transportation is different from intermodal transportation, in which you’ll need different contracts with multiple operators. This means in multimodal transportation, your carrier is the only one fully responsible for the complete shipment.
Who is a Multimodal Transport Operator (MTO): An overview
A multimodal transport operator is a person or an organization who engages in the transportation of goods using multiple modes of transportation under the multimodal transport contract. These entities can include shipping lines, freight forwarders, or NVOCC operators on whose behalf the bill of lading is eventually issued.
The multimodal transport operator is responsible for the complete shipment of goods/cargo from the place of pick-up to the place of delivery. They are also more or less responsible for all kinds of communication and coordination involved in the process.
Multimodal transport operators play a key role within the Indian shipping business. So much so that whether you’re a shipping company or a freight forwarder (in India or abroad), you must register yourself under the Multimodal Transportation of Goods Act, 1993. Doing so will help you deliver goods hassle-free and systematically outside or within India.
Now that you’ve touched base with who is an MTO, let’s take you through the act we just wrote about.
What is the Multimodal Transportation of Goods Act, 1993?
A safe and transparent transportation process is essential for successful global trade relations between suppliers and customers.
And having a legal document in place, such as the Multimodal Transportation of Goods Act, 1993, can help you achieve that.
According to the Act, you can undertake the transportation of your goods from and to India through multiple modes of transportation effectively.
The Act considers unregistered multimodal transport administrators “completely illegal”. This means you’ve to register yourself to carry on a multimodal transportation business.
The Multimodal Transportation of Goods Act, 1993, lays down a few key responsibilities that you should keep in mind. Let’s look at a few of them:
- The MTO is liable for any loss or damage to a consignment he’s in charge of.
- This includes delays in deliveries of the consignment under his charge — unless he can prove that none of his actions are responsible for the loss or delays.
- The MTO takes over responsibility for the entire shipment from the pick-up location to the place of delivery.
- May take the responsibility for communication and coordination.
The above-stated responsibilities can benefit you if you’re looking to register as an MTO. On a side note, multimodal transportation can turn out to be beneficial as it helps you reach remote parts of the world.
MTO is an essential license to have to keep your shipping process as transparent as possible. Especially if you are exporting goods from and to India via multimodal transportation.
And once you become a registered multimodal transport operator, you can gain more transparency among your partners on xChange. Not just this, you also get access to 1000+ vetted members, enjoy the lowest pick-up rates for one-way lease containers, and give your cargo a smooth sail. Transportation of your goods will only see the daylight from here on!
How is a multimodal transport operator different from freight forwarders?
This is actually pretty simple to understand. The basic difference between a multimodal transport operator and a freight forwarder is as follows:
A multimodal operator is responsible to plan and execute the entire shipping process, including the mode of transportation. Whereas, a freight forwarder then simply applies it to the process and issues the single bill of lading.
Registration process for a multimodal transport operator in India
The Multimodal Transportation of Goods Act, 1993 requires every company engaged in the shipping business or freight forwarding in India and abroad to register under this Act. And it’s a mandatory process. Without registration, you aren’t allowed to carry on with any commercial business that requires multiple modes of transportation.
Now that we are talking about the registration, here are the 8 most important documents you’ll need for the registration process:
- Copy of Income Tax Returns (ITR) for the last 3 years.
- Certificate of Incorporation and a copy of Memorandum and Articles of Associations.
- Names of all directors, partners, and proprietors with Indian contact details.
- Certificate from your Chartered Accountant showing annual turnover for the last 3 years.
- Copies of agency agreements showing multimodal operations with at least two agents from two different countries. Additionally, confirmation of the validity from the same agents via email.
- Complete auditor’s report, schedules, and notes to accounts for the previous financial year.
- List of offices, names, designation, specimen signature on letterhead, and proof of employment of staff members you’ve decided as authorized signatories for all multimodal transportation documents.
- Undertaking on the letterhead with the signature of the person responsible for issuing the multimodal transport documents and who would be in charge of all exported goods from India.
Once you’ve got all the documents mentioned above, you can register online to be a certified MTO via the government website. You need to pay a fee of US $130.30 during the registration.
Are you a registered MTO? See how xChange can benefit you
To operate on xChange, a registered multimodal transport operator is a must-tag. It helps you increase transparency among other partners. Considering that every member on xChange is vetted, an MTO license only acts as a bonus. You can not only find containers globally at the best price but also make deals directly with other partners.
xChange is already home to some of the biggest names in the industry, such as Kuehne+Nagal, Maersk, Sarjak, Conway, and COSCO Shipping. And now, it’s your time to join them and grow your business.
xChange has 1000+ vetted members and sees a monthly transaction of more than 10k containers. This means you can find your desired boxes easily across 2500+ locations.
Excited to be a part of our neutral marketplace? Or looking for more information on multimodal transport operators? Click on the banner below and fill in your details. Our support team will reach out to you and address all your queries. They’re also excited to give you a quick tour of our platform and find you the right container.
When did the Multimodal Transportation Act come into force?
The Multimodal Transportation Act came into force on 4th April, 1993. According to the Act, you can perform or undertake the transportation of your goods from and to India through multiple modes of transportation effectively. The Act considers unregistered multimodal transport administrators completely illegal. This means you can’t carry on a multimodal transportation business unless you’re registered.
What are the advantages of multimodal transport?
The advantages of multimodal transport are that it minimizes the time lost at transshipment points. It is more planned, thus, it decreases the chance of a loss of time, loss, damage, or pilferage of cargo at transshipment points. Multimodal transport requires only one bill of lading.
What is Multimodal Transport Operator (MTO)?
A multimodal transport operator is a person or an organization who engages in the transportation of goods using multiple modes of transportation under the multimodal transport contract. These entities can include shipping lines, freight forwarders, or NVOCC operators on whose behalf the bill of lading is eventually issued.
