5.4 Multimodal transport and sub-contracting
Like quality assurance, multimodal services have their roots in the military. The first 8 x 8 x 19 ft. containers were used by the US Army after World War II. The first civilian multimodal transport took place in 1956 when the ship Ideal X carried 58 truck trailers from New York to Houston . In 1958, the Matson Navigation Company started operating a container trade on the west coast of the USA to Hawaii . Today sixth generation container ships, carrying over 6,000 TEUs (twenty-foot equivalent units) are in service on the main sea trade routes. Developments in multimodal transport have been made possible only by the availability and use of communications and computing technology, which allows detailed planning and execution of operations quickly, efficiently and on a global scale.
Multimodal services are available not only for goods in containers but also, for example, for goods carried in bulk by the sea mode, loaded into containers and moved by a selection of land modes to the receiver.
According to Hall (1992) service quality in transport includes:
- on time pick up and delivery
- equipment condition
- cleanliness and availability
- compliance with environmental standards
- effective communications
- competence
- courtesy and appearance
- internal monitoring of service
- accuracy in billing
- prompt handling of claims
- ISO certification
- financial stability.
In the "total cost" paradigm of "shared" or "global production" and "international market access", transport plays a vital role. In this context, distribution includes not only the function of transport by the land/air/sea modes but handling, storage, and value-added services like marketing, packaging, inventory control, etc. provided by the terminals and warehouses. Carrier selection becomes critical when the large percentage that logistics costs make of the final price are considered. Any waste or inefficiency in the system has to be passed on either to the shipper (affecting the profit margin) or the customer (affecting the market share). The responsibility this puts on the carrier is to deliver the goods in the condition that they were shipped in, or was agreed with the shipper, at the time and the place agreed.
An important element of the international multimodal transport is the sub-contracting of services. This can be a difficult area for the carrier management to come to a decision on because customer satisfaction (continued business) depends here upon the quality of the service provided by the third party. Elements of transport services such as packaging, suitability of material used, securing and protection from the elements can affect the condition of the cargo carried. For businesses that have a formal quality system and seek to provide the assurance of quality to their clients, the use of transport services that can permit such an effect on their goods is an important factor to consider. However, the use of the carrier depends upon the conditions of the contract of carriage. If the customer specifies the carrier, the shipper of goods does not have to use an approved carrier. If the carrier is not specified, the terms of sale of goods will clarify the responsibilities of carriage. Usually, the shipper is responsible for delivery of goods till they are shipped (under f.o.b terms). At that time, responsibility for the condition of goods shifts to the carrier. Other conditions of sale may include carriage, insurance and freight to be paid by the shipper of the goods (c.i.f. terms). (Find out what these terms are if you are not familiar with them already.) Sometimes, packaging, consolidation, crating or other value added activity is carried out at the responsibility of the carrier.
A shipper or producer may not be responsible for delivering a package or a cargo to a customer (if they have given this responsibility to another business - subcontracted), but they are still responsible for the customer getting what was ordered. Even if it is the transport company's fault, dissatisfaction of the customer is with the seller, not the carrier. As such, the seller needs to seek assurance of the quality of the service provided by the carrier.
Activity 5.4
How does your organisation control the quality of subcontracted services?
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