Combined Transport and Its Benefits

Think about the route a shipment must take. In many cases, there is no one way to transfer the cargo from the origin to the destination, and the transfer must be combined with air and land, which includes road and rail methods and the sea method. This is a combined shipping method. You may also come across the name “multimodal transport” or “Combined Transport” in some sources. In this article you will find the following topics:

• An introduction to composite transportation
• Advantages of combined transport
• Effects of mixed transport

An introduction to combined transportation

The increasing world population brings the need for more production, and at the same time, the amount of movement of goods at the international level also expands. Among these, the most essential factor for speeding up the transportation of goods is the standardization and coordination of various activities in this industry. Due to the necessity of this coordination and unification in the movement of goods, in 1977, the International Chamber of Commerce approved a document confirming the combined transport.

The United Nations Trade and Development Organization (UNCTAD) oversees this transportation system at the global level. What is certain is that the development of effective and efficient transportation services that meet the needs of the commercial sector will be realized in favorable political and economic conditions.

On the one hand, governments emphasize the expansion of transportation services in order to encourage their exports. On the other hand, companies, organizations, and transportation professionals are trying to find ways to reduce costs. If Iran’s maritime transport companies and institutions cannot somehow connect themselves to the multimodal transportation network, they will not benefit from its increasing benefits, and their future development will also face problems.

Advantages of combined transport

A) Energy Reduction

In recent years, governments have been constantly trying to find ways to reduce energy consumption, especially in the transportation sector. Rail transportation systems, while providing high transportation capacity, provide high fuel savings compared to other systems (air, sea, and road). Considering that most countries’ railways are state-owned, the governments are using this lever to connect their rail systems to the international trade network, including sea and road transport.

B) Shipping Speed

A common service consisting of containers, roll-on/roll-on ships, rail, and the road will allow cargo to be quickly transferred from one means of transport to another in ports (trans-shipment) and thus To avoid the delay in unloading and loading and of course the related costs that are common in traditional systems.

C) Improving costs and infrastructure

Combined transport enables the best use of existing transportation units and infrastructure facilities in dealing with rising costs (especially in terms of wages and investments) and encourages the development of concentrated investments.

D) Facilitating the shipping process

By using a transit transportation system, the preparation and control of documents, tariffs, responsibilities, etc. become very easy and this in turn provides benefits in finance and insurance of export products.

E) Balance of speed and cost

Speed in cargo transit, especially in the case of CIF goods (goods whose price is calculated based on delivery at the destination and includes shipping costs. On the other hand, the FOB price of goods is calculated based on delivery at the port of origin and of course, shipping costs and other side costs are the responsibility of the buyer) leading to quick payment and receipt of goods and shipping costs. In addition, the importer minimizes his inventory by ensuring the quick receipt of the goods and thus prevents the blocking of a major part of his working capital.

F) Cost Reduction

The relatively low cost of the combined transportation system promises the best prospects for the exploitation of global resources.

G) Increasing integration

Using this method helps to unify common activities and codes at the international level. Common characteristics for containers, common codes for the responsibilities of transport companies, standardization of documents, etc. are among these. Progress in these fields will lead to greater understanding and confidence among the business communities of the world and will help the development of international trade.

H) Increase capital utilization

The benefits and applications that will be achieved through the use of common systems, such as international standards (ISO) for containers and equipment, will lead to the maximum utilization of existing capital.

I) A bright future

The capabilities of combined transportation systems give shipping companies a clear perspective to maintain and develop export markets.

J) Better condition of goods

Goods that are transported using combined systems usually reach the consumer in better conditions than traditional methods. This is a big advantage that helps transport companies in developing their service quality.

Effects of Combined transport

From the point of view of macroeconomics, the faster growth of the economy is realized with the optimal use of effective production and transportation systems and the efficiency of this network. This in itself causes economic growth to take place without an increase in the cost of moving goods, which will have a favorable effect on not increasing inflation and even reducing it. Based on this, the importance of the multimodal transportation network and its effects on developing economies can be summarized as follows:

1. Multimodal or combined transportation can have a great impact on the commercial structure of developing countries. This positive effect will boost foreign trade and increase the country’s exports.
2. Combined transportation allows the consumer to have more choices about his desired product.
3. The development and further use of combined transportation will increase economic growth by using mass production on a large scale.
4. This method of transportation increases the efficiency of infrastructure and means of transportation and increases the power and specialized power in mass production on a large scale.
5. Combined transportation lowers the cost of commercial goods and provides access to competitive markets for them. Therefore, manufacturers of industrial and agricultural goods can distribute and sell their products competitively in the domestic and international markets at the lowest cost. Compared to traditional systems, multimodal transportation imposes lower costs on manufacturers and traders by using facilities such as higher technology, less labor, lower business correspondence costs, better planning, and so on. In turn, it affects the final price of the product for the consumer.
6. The conducted research shows that the consumption costs in the traditional transportation system, bureaucracy, and cumbersome administrative procedures are reduced by using combined transportation. This is due to the high efficiency of the combination of different networks (land-rail-sea-air). There are other factors, such as reducing the costs of listing goods, logistics costs such as storage, reducing tariffs and saving time in reviewing and implementing specific laws for each product, and sometimes obtaining orders and obtaining approval from higher authorities, reducing packaging costs. , payments related to servicing the owners of the goods, extensive costs of port operations, storage, terminal, loading, maintenance and operating costs of the means of transportation (trucks, ships, planes, and trains) and the like in reducing the total cost of transportation and Narration is more effective than traditional methods.
7. The increase in economic efficiency and the competition of a larger number of producers cause prices to fall and increase the choice of consumers. This is only possible if there is a regular transportation network and efficient physical distribution.
8. The use of combined transportation in providing government services, such as emergency services in the export and import of essential goods, in the event of unexpected and natural incidents that the government needs to move goods, both from outside the country and inside the country, can be very useful and effective.
9. The existence of an effective transportation network causes large production factories to be located far from consumption centers and non-centralized population areas, thereby reducing the pollution of urban environments and population centers. This issue also leads to the planned use of the land-based on experimental plans. This feature is due to the effective effects and high efficiency of combined transportation that the manufactured goods can reach the final destination at a low cost.
10. Combined transportation is very useful for countries that do not have access to the sea and also for countries located on transit routes since the destination country can import the goods it needs without worrying about unnecessary formalities and at a low cost. At the same time, the transit country also obtains stable sources of income through receiving tolls for transporting goods from within its own country and selling various services.