Containerization

Containers were introduced in US during 1955 and in India during 1960

Features of a container:
1. Robust but still light to ensure several handlings during unbroken transport of goods by several
modes
2. Equipped with fittings to facilitate safe and easy handling
3. Easily be stuffed or unstuffed in a short time
4. Water tight and air tight outer shell
5. Internal lining that doesn’t buckle under temperature and can be easily cleaned
6. Watertight flooring, air tight door seals and locks
7. Insulation to protect refrigerated cargo. Interior washable to required hygienic standard
8. Construction to allow circulation of air around cargo. Potential areas for containerization are food
stuff
Universal advantages of container as a packaging unit
1. Reduction in loss, pilferage and damage of goods
2. Reduction in paper work
3. Expedites door to door pick up and delivery
4. Eliminates multiple handling of contents as this is shipped as a single unit
5. Consolidation of movement of small lots
6. Standardization of handling methods and equipment
7. Reduction in packaging cost as container itself acts like a package
8. Optimizes the services of various modes. Container can easily be transshipped.
Benefits of owning containers by product owners
1. Ensures supply of containers
2. Product specific internal fittings can be provided
3. Reduction in transportation costs if the traffic is two way
4. Control of internal cleanliness as per product need
5. It can be used for delivery after arrival
6. Good storage system
Major benefits of containerization to business
1. Integration of various modes of transport
2. Reduction in handling time and thereby turn around time of vehicles
3. Standardized size of containers reduces reduce capital as well as operational costs
4. Reduction in packaging cost as container itself is a robust packaging
5. Need for enclosed warehouses redundant
6. Regularity and reliability of transport service
Infrastructure of containerization
1. Deep water ports
2. Mechanized handling equipment
Roll On/Roll Off [RORO]

High cost of lifting a container from the truck and loading on to a ship made logisticians look for a new
idea. Concept of RORO is driving the truck loaded with the container directly on to the deck of a ship and
driving off the deck on reaching the destination. Truck loaded with container uses the ship as a mobile
bridge! You may have seen passenger buses rolling on to ferries and rolling off
after crossing the river.

LASH [Lighters Aboard A Ship]

All ports are not accessible to deep water vessels. The deep water ships stand a long way off on sea. Cargo from
shallow ports is loaded on the barges, the barges are towed to the ship. The huge crane of the ship lifts the entire
barge and places it on the deck. After reaching the destination barge is placed on shallow waters to reach the port.

Inland container depots

Inland Container Depots [ I C Ds ]

ICDs are dry ports. Dry ports at a distance far away from the shoreline handle all the import export formalities.
ICDs act like deep-water ports installed inland or interior where the natural benefit of shoreline is non-existing.
This a large warehouse where containerized cargo is accepted for export. The exporter books his cargo at an ICD
and completes all export formalities. Thereon ICD moves the containers by movement consolidation to natural
port. Cargo crosses the dock and goes into the waiting ship.

• connect major ports [able to handle container ships] to hinterland. Hinterland is deprived of natural deep water
ports because of geography. This hinders exports. Congestion gets created at natural deep water ports when export
cargo arrives from hinterland. Deep water ports being limited in number suffer congestion as deep water ships
carrying export cargo dock only at deep water ports.

• facilitate customs clearance, export import formalities. ICDs ensure that businessperson does not have to go to
the deep water ports with his cargo for clearing import/export formalities.
• ICD to be located after ascertaining export import potential and good road network. One of the objectives of
creating ICDs is to facilitate harnessing export potential of hinterland. Hence this location analysis is essential.

• Serve as consolidation facility and should have handling equipment. Facility to group small consignments and
create container loads needs handling equipment.

• goods transfer from road to rail and otherwise. Inter modal transfer is a major operation in an ICD. ICD
consolidates consignments arriving by trucks and transfer the cargo in containers to another mode, say rail for
onward movement to a natural port.

• increase the export potential of industries in the hinterland and also simplifies import of goods by hinterland.

• Decongest major ports. This is another benefit provided by ICDs which is of immense importance for a country
with weak infrastructure like ours.

 Benefits of containerization can be fully exploited only when we have a good net work of ICDs [Inland
Container Depots]
While most of the bulk goods are transported by rail, all other goods are transported by road.

• Although Rajasthan is a land-locked state, four inland container depots (ICDs) at Jaipur, Jodhpur,
Bhiwadi and Bhilwara, along with an air cargo complex at Jaipur's Sanganer Airport act as efficient and
convenient gateways for outbound cargo. The customs department, shipping companies, handling
agencies, surveyors for authentication of stock, banks, customs house agents and clearing and forwarding
agents are all based at the ICDs.
• The infrastructure at the ICDs has been strengthened with the deployment of better equipment. This has
resulted in the quicker handling of containers, reduction of transit time from ICDs to ports. Of the total
export cycle time, the dwell time is down to 1.9 days, compared to three days at other ICDs.
• Tariff at the Jaipur and Jodhpur ICDs has been reduced by 20 per cent, recently.
• The air cargo complex provides facilities for customs inspection and shipment of non-bulk goods for
exports by air. To overcome the problem of a limited lifting capacity of Indian Airlines, a scheme of
bonded trucks has been started.

JNPT is directly connected to the following Inland Container Depots:

Ludhiana Delhi

Kerala Sabarmati
 Nagpur Pune

Mumbai (Wadibunder) Hyderabad

Chinchwad (Pune) Visakhapatnam

Bangalore Muradabad (U.P)

Chennai Kolkata

Jaipur Pitampur (M.P)

Jodhpur Aurangabad

Baroda Kanpur

Mirage Malanpur

Kandla Agra

Mulund --

THE PORT

Introduction

A port is the interface between the maritime and the domestic transportation sectors. It plays a key role in the
development of any economy. Any imperfections in this “gateway” would have a drastic effect on the economic
planning schemes of the country.

The trend of foreign trade is increasingly becoming “East-West traffic” – most of it consisting of high-technology,
time sensitive products moving as a part of an integrated logistics and manufacturing system. Technology trends
include larger ships, domestic containerization, intermodalism, integrated transportation companies, and
electronic data interchange (EDI.) Finally, other trends in this new business environment include package pricing
(or point-to-point pricing), value-added services by ports, inter-modal container transfer facilities, and on-dock or
near-dock container transfer facilities. As a whole, the business of managing and operating a marine port terminal
is becoming more and more complex. However, this complexity is incorporated in few studies since research still
continues to be focused on specific segments or “sub-systems” of the whole system.

The Subsystems

The “capacity question” of a port cannot be answered solely within itself. A port is only a sort of “gateway” for
imports and exports, and not the final site of either production or consumption. The port is merely a connection
to the sea on one side and to inland transport facilities on the other. Therefore, improvement of this
intermediary system, without the simultaneous consideration of the joint systems, will result in nothing other than
shifting the problem from one sector to another. Advantages from such superficial improvements to the port
system, without making adequate safeguard against the rise of bottlenecks at some points in the other connected
systems, are quickly dissipated. Hence, a brief discussion of a port’s subsystems is presented at this point. The
subsystems of a port consist of (1) Navigational system, (2) Handling system, (3) Storage system, and (4) Inland
connections.

Navigational System

The number of items that can be classified under this category are quiet large – lighthouses, buoys, radio aids,
harbor radar, tug-berth system, channel width and draft restrictions and so on. Ones requiring closer scrutiny are
the tug-berth system and the draft restrictions. The tug-berth system is indispensable to large ports, but with
appropriate management and implementation, optimality of this system may be achieved. Draft restrictions, on
the other hand can cause severe restrictions on the ports operational limits. This is more so in the case of tanker
and container-berths, where the size of ships has quickly outgrown the average ports capability of berthing them.
Therefore to accommodate bigger vessels and maintain a competitive status, ports will have to make judicious and
timely investments in deepening its approaches.

Handling System

The handling system is the true interface between marine transport and inland transport. Efficiency in the
handling system depends not only on the handling rate at the quay-side, but also on the extent to which the link-
ups between this system and all subsequent ones are properly matched. Little improvement in overall
productivity would result, unless it was well matched by commensurate improvements of the incorporated system.
Under this system, factors such as number, length and types of berths and gantries, gantry capacity and efficiency,
berth storage transfer capabilities and capacities, storage-inland transport transfer capabilities and gate processing
rates are considered. Inefficiencies in any one of these stages would result in a “bottle-neck,” effecting the
performance of the total transport system. Human factors, such as working intensity, effective labor allocation,
work hours per day and days worked per year, overtime regulations and costs, and so on are equally important. It
is intuitively clear that some excess berthing capacity is desirable to overcome congestion problems due to factors
such as insufficiency of the handling system, irregular pattern of ship arrivals, seasonal effects, and bottlenecks
caused by poor link-ups.
Storage System

Storage systems provide a variety of services – transit sheds, warehouses, open shed, grain silos, container parks
and so on. They provide users with options of direct (not requiring storage at all) and indirect (i.e. by way of the
storage system) routes; serving as a kind of “buffer” between marine transport and inland transport. The basic
functions of the storage system of a port are to keep cargo for certain formalities such as customs clearance and to
accommodate cargo for varying periods of time, providing a flexible period for shippers to adjust to delivery
requirements.

There are a number of factors within the port system, which can impede smooth operations and thus retard the
level of throughput. Some examples include the efficiency of handling equipment at berths, number of fork lifts
available for cargo carriage, the degree of sophistication in the overall information system, the reliability of
software used to decide on stacking locations, restacking and consolidation, and relations with labor
organizations. But one of the main determinants of the berth throughput under normal circumstances is the
capacity of the storage system. Taking into account the facts that the amount of storage space available in a port
is usually quiet limited and any expansion would require substantial planning and capital investment, the storage
system is of critical importance, especially in view of the danger of its becoming the most greatly constricted
bottleneck of the total system. Modern container freight stations (CFS) with intermodal transfer capabilities (rail
and truck) have alleviated a ports dilemma of lack of expansion space to a certain extent, while inland ports have
done so, with an additional effect of attracting freight from areas encroaching into the natural territories of
neighboring ports! Improved logistics and inventory controls, the concept of “just-in-time” service, high-tech
container tracking systems and innovative storage pricing policies have all gone a long way in improving the
efficient utilization of the port storage space system.

Inland Connections1

Inland transport is the pipeline connecting the port with domestic markets (for imports) as well as production sites
(for exports). Without effective inland connections the port cannot function. This sector is beyond the control of
port authorities, though its effect is felt profoundly by it. Goods are transported away from the port by basically
1Strategic planning of the intermodal transportation system is discussed in greater detail in an earlier paper (Pappu & Mundy,
1995)
three modes – road, rail or barge. The reliability of the delivery system depends upon the operating efficiency of
the vehicles and the associated infrastructure (trucks and highways, wagons and railway system, barges and inland
waterway network).

Summary

From the above discussion it is clearly evident that the analysis of a port system is complex, and involves a large
number of detailed and intricate subsystems. The total system requires a closer scrutiny than most researchers
have given it. This is not meant to refute the results and the observations made by them, but merely adds certain
doubts about their universal applicability. Most researchers model their analysis based on certain case studies,
and justify the methodology by correlating it to actual observations made. It is my intention to present a
methodology that is not based on any existing case study and may be used to analyze any port transport system.

MARITIME FRAUD

Maritime fraud is co-existent with maritime trade.

Definition

Maritime fraud occurs when one of the parties involved in an international trade transaction
like the buyer, seller, shipowner, charterer, ship’s master or crew, insurer, banker, broker or
agent illegally secures money or goods from another party to whom, on the face of it, he
has undertaken specific trade, transport and financial obligations.

Development

Earlier Maritime fraud was only at the parochial level. But currently it has come to the
International level. Asia and the Indian Sub-continent are the worst affected by these
frauds.

Elements

The elements of the different types of maritime fraud are mentioned below.

• Offering goods in stringent demand and not readily available

• Offering goods at unduly low prices especially from a country or a
seller who is not a normal source of supply
• Calling for payment conditions out of line with those customers
normally expect.
 • Requiring advance payment through an intermediary offering the
goods without disclosing name of suppliers.
• Involving use of names that resemble but are not those of
wellknown houses.
• Pressurising for fast acceptances of offer and speedy issuance of
documentary credit.
• Requiring payment by documentary credit issued in favour of party
other than named.
• Requiring Charter Party Bills of Lading to be accepted when
contrary to nature of transaction or type of goods.
• Offering for sale and insurance of non-existent cargo.
• Issuance of False certificates by corrupt port officials for short
landing of cargo.
• Issuance of Bills of loading without actual loading of cargo.
• Exportation of rubbish by consignors.
• Illegal manipulation of valves at oil terminals.
• Oil used as bunker.

Types

Frauds are broadly classified into Documentary, Shipping and Charterparty frauds.

1. Documentary: Some or all of the documents specified by the buyer for presentation
by the seller to the bank to receive payments are forged.
2. Shipping: It includes scuttling, deviation, cargo theft, arson or so called accidental
fires in which vessel or cargo isdisposed of with the connivance of her owners.
3. Charter Party: It occurs when one or two contracting parties default, leaving the
others to clear the mess. These contracting parties for a Time or Voyage charter are
shipowner, charterer and cargo owner. Such frauds were not uncommon in the past
but the problems escalated following oil boom, excess tonnage, congested ports,
inexperienced developing countries in international trade and disturbed political or
social conditions in various countries.
4. Theft of cargo by crew.

Problems

Detection becomes difficult since all parties are not co-operative and the investigation is
expensive. Jurisdiction for prosecution is also another impediment.

Precautionary Measures

The following precautionary measures are suggested:

a. Dealing only with reputed companies

b. Awareness to traders by Embassy commercial sections and
Chambers of Commerce of the risks in trade and transport transactions and
the necessity to check before advancing the names of potential suppliers,
buyers or transport companies.
c. Regarding the mode of payment from the seller’s point of view a
documentary credit confirmed by a bank acceptable to him will be the
 safest provided he will be paid on presenting documents on time
conforming to the terms and conditions of the documentary credit.
d. Proper understanding of shipment terms.
e. Inspection and approval of goods and vessels by authoritative
organisations.

Freight Forwarders

Freight Forwarders are intermediaries who know the conditions of local transport markets.
They have continuing contacts with the ship owners or charterers and their port agents.
They act as the ‘Shipper’s antenna’ in solving specific transport problems and provide
information about shipping services.

Banks

Banks encounter two types of fraud:

a. Presentation of genuine documents but with subsequent fraudulent

action by a third party in respect of the goods.
b. Presentation of fraudulent documents in respect of inferior goods
or non-existent goods.

Vessel Owners and Charterers

a. Vessel owners and charterers may adopt the following steps in avoiding frauds.
b. Owners should take timely advice from charterers before agreeing to a charter.
c. The charterers’s financial status has to be checked by the owner.
d. Care should be taken to ensure that bills of lading are signed by authorized persons.
e. When a bill of lading is issued, Masters should ensure that cargo is only released
against the original duly endorsed.
f. Masters should be encouraged to radio their position through certain periods of the
voyage.

Insurers

Insurers protect the buyer or seller of goods under contracts of international trade. They
have taken steps to prevent maritime fraud.

Conclusion

Improvements in the overall international trading system can check maritime fraud.
Organisations such as the International Chamber of Commerce (ICC) are specifically
devoted to such improvements.
Infrastructural Bottlenecks
It is widely accepted that India's export potential remains considerably unfulfilled because of
infrastructure bottlenecks such as power shortages, port handling facilities, delays in
transportation which in turn are due to poor transport links within the country and poor
communication facilities. The inability of Indian exporters in meeting supply schedules costs dearly in terms of
image of India as a reliable source of supply. Not only that the availability of the infrastructure services is
inadequate but the efficiency and quality of the delivery of what is available is highly uneven. The ability of the
government in removing these constraints in the coming years will also determine the supply side of Indian
exports.

FOREIGN FREIGHT FORWARDER: A corporation carrying on the business of forwarding who is not a
shipper or consignee. The foreign freight forwarder receives compensation from the shipper for preparing
documents and arranging various transactions related to the international distribution of goods.Also. a brokerage
fee may be paid to the forwarder from steamship lines if the forwarder performs at least two of the following
services: ( 1 ) coordination of the movement of the cargo to shipside; (2) preparation and processing of the Ocean
Bill of Lading; (3) preparation and processing of dock receipts or delivery orders; (4) preparation and processing
of consular documents or export declarations; and (5) payment of the ocean freight charges on shipments.
Outlines
Definition of o Contract of Carriage and Classification of Carriers :

In the commercial life of any country, the need for carrying goods from one place to another cannot be
overemphasised. Also, goods are to be moved from one country to another. For these purposes, a contract of
carriage is to be entered into. The persons, organisations or associations which carry goods are known as carriers.
Goods may be carried by land (including inland waterways), sea or air. Accordingly, the law relating to carrying
of goods is contained in the following enactments:

1. In case of carriage of goods by land:

(i) The Carriers Act, 1865. (ii) The Railways Act, 1989.

2. In case of carriage of goods by sea:

(i) The (Indian) Bills of Landing Act, 1856. (ii) The Carriage of Goods by Sea Act, 1925. (iii) The Merchant
Shipping Act, 1958. (iv) The Marine Insurance Act, 1963.

3. In the case of carriage of goods by air: Earlier(The Carriage by Air Act, 1972) .Now The Carriage by Air
(Amendment) Bill, 2007

Wherever there is no specific provision for a particular matter in these statutes, then the Indian Courts resort to
English Common Law.

Definition of a Contract of Carriage. A contract of carriage of goods is a contract of bailment for reward, or
locatio operis faciends. However, the contract of bailment is modified by the different statutes mentioned above in
the case of carriage of goods by land, sea or air.

Classification of Carriers. Generally speaking carriers are classified into (i) common carriers, (ii) private carriers
and (iii) gratuitous carriers.

Common Carriers. The Carriers Act, 1865 defines a common carrier as any individual, firm or company (other
than the government, who or which transports goods as a business, for money, from place to place, over land or
inland waterways, for all persons (consignors) without any discrimination between them. A carrier must carry
goods of the consignor for hire and not free of charge in order to be called a common carrier. Further, he must be
engaged in the business of carrying goods for others for money from one place to another. A person who carries
goods occasionally or free of charge is not a common carrier. Furthermore he is bound to carry goods for all
persons (consignors) without any discrimination provided:

(i) the freight chargeable by him is paid to him;

(ii) there is accommodation on his conveyance; and
(iii) there is nothing objectionable or illegal about the carrying of goods of a particular consignor.

If, in spite of the above conditions being satisfied, a carrier reserves to himself the right to accept or reject an
offer, he is not a common carrier. It is worth noting that the Carriers Act, 1865 covers only common carriers of
goods and not passengers.

Private Carriers A private carrier is one who does not transport goods from one place to another regularly; he may
engage in some casual jobs of carrying goods for certain selected persons between certain terminals. In fact, he
carries his own goods and that’s why he is known as a private carrier and not a common carrier. Also, he does not
make a general offer to carry goods for any one from one place to another for hire. However, he may enter into a
contract with someone to carry goods on the terms agreed upon between them. In such a situation, it is a contract
of bailment. Therefore, such transactions are not covered by the Common Carriers Act, 1865.

Gratuitous Carrier. When a person carries goods of another free of charge, he is a gratuitous carrier. Similarly a
person may give lift in his transport to another person voluntarily without any compensation. Thus a gratuitous
carrier may carry not only goods but persons also free of charge.

Responsibility of Common Carrier and Bailee. We know that a bailee is responsible only when the goods
entrusted to him are lost or damaged due to his fault or negligence. But the responsibility of a common carrier is
more onerous; he is to deliver the goods safely. Therefore, in the case of a common carrier, it is immaterial
whether the loss or damage to the goods is due to his or someone else’s negligence.

Distinction between a Common Carrier and a Private Carrier.

The distinction between the two is as follows:

(i) A common carrier publicly undertakes to carry from place to place the goods of any person who chooses to
employ him. A private carrier does not carry regularly from place to place but is an occasional carrier.
(ii) A common carrier is bound to carry the goods of any person provided certain conditions are satisfied. A
private carrier is free to accept or reject the goods for carriage.
(iii) The liabilities of a common carrier are determined by the Common Carriers Act, 1865. A private carrier’s
liability is not determined by the Common Carriers Act, 1865. He is liable as a bailee as given in the Indian
Contract Act, 1872.

Carriage of Goods by Land

As mentioned above, the following two statutes govern the carriage of goods by land: (i) The Carriers Act, 1865.
(ii) The Railways Act, 1989.

The Carriers Act, 1865. This Act defines the term “common carrier” and provides for his rights, duties and
liabilities. As regards matters not covered by this Act, the rules of English Common Law will apply.

Rights of a Common Carrier. His rights are:

(i) He is entitled to the settled remuneration and in case no remuneration was settled, to a reasonable
remuneration.
(ii) He has a right to refuse to carry goods under certain circumstances (as enumerated under the duties of a
common carrier).
(iii) He has a lien on the goods for his remuneration. He can refuse to deliver them until his charges are paid.
(iv) If the consignee refuses to take delivery of the goods, when tendered, the common carrier has a right, to deal
with the goods as he thinks reasonable and prudent under the circumstances.
(v) He has a right to recover reasonable expenses incurred by him as a result of the consignee’s refusal to take
delivery. After giving notice to the consignee, the common carrier may even sell perishable goods.
(vi) He can recover damages from the consignor if the goods are dangerous or are loosely packed and the carrier
suffers injury therefrom.
(vii) He can limit his liability subject to the provisions of the Carriers Act.

Duties of a Common Carrier. His duties are:

1. A common carrier is bound to carry goods of all persons who choose to employ him. He can, however, refuse
to carry goods under the following circumstances:
(a) if there is no accommodation in the carriage;
(b) if the person employing him is not willing to pay reasonable charges for the carriage of goods;
(c) if the goods are such which he is not accustomed to carry;
(d) if the goods are to be carried over a route which is not his regular route;
(e) if the goods are-dangerous and as such subjecting him to extraordinary risk;
(f) if the consignor refuses to disclose the nature of the goods to be carried; and
(g) if the goods are not properly packed.
If a carrier refuses to carry the goods of a person for any reason other than those mentioned above, he may be held
liable for damages.

2. He must carry the goods over the usual and customary route and take all reasonable precautions for their safe
carriage. He must not deviate from the usual route unless rendered necessary by exceptional circumstances.

3. He must deliver the goods at the agreed time and if no time had been fixed, within a reasonable time.

4. At Common Law, he is an insurer of the goods in the sense that he warrants to carry the goods safely and
securely.

Liabilities of a Common Carrier : The liability of a common carrier of goods is laid down in the Carriers Act,
1865. For this purpose, the Act has classified the goods into two categories:
(i) Scheduled goods and (ii) non-scheduled goods.

The scheduled goods are those which are enumerated in a Schedule to the Act. They are valuable articles like
gold, silver, precious stones and pearls, bills and hundis, currency and bank notes, glass, china silk, articles of
ivory, time pieces, musical and scientific instruments, etc. All other goods are non-scheduled.

For scheduled articles exceeding Rs. 100 in value, the carrier is liable for loss and damage only:
(i) if the value and the description of the goods are disclosed by the consignor to the carrier; or
(ii) if the loss or damage is due to a criminal act of the carrier, his agent or servant.

The carrier can charge extra for carrying scheduled articles, but he cannot limit his statutory liability by any
special agreement.

As regards non-scheduled articles, a common carrier can limit his liability by special agreement with the
consignor. But even in this case he will be liable under Section 8 of the Act (explained below).

In case of loss or damage, the claimant must notify the carrier within six months of the date of knowledge of the
loss or damage.

Carriage of Goods by Rail

Summary of More Important Provisions The carriage of goods by rail is regulated by the Railways Act, 1989.
1. Maintenance of rate books, etc., for carriage of goods (Section 61). Every railway administration shall
maintain, at each station and to such other places where goods are received for carriage, the rate books or other
documents which shall contain the rate authorised for the carriage of goods from one station to another and make
them available for the reference of any person during all reasonable hours without payment of any fee.

2. Provision of rate risks (Section 63). Where any goods are entrusted to a railway administration for carriage,
such carriage shall, except where owner’s risk rate is applicable in respect of such goods, be at railway risk rate.
Any goods, for which owner’s risk rate and railway risk rate are in force, may be entrusted for carriage at either of
the rates and if no rate is opted, the goods shall be deemed to have been entrusted at owner’s risk rate.

3. Forwarding note (Section 64). Every person entrusting any goods to a railway administration for carriage
shall execute a forwarding note in such form as may be specified by the Central Government.
The consignor shall be responsible for the correctness of the particulars furnished by him in the forwarding note.
He shall indemnify the railway administration against any damage suffered by it by reason of the incorrectness or
incompleteness of the particulars in the forwarding note.

4. Railway receipt (Section 65). A railway administration shall issue a railway receipt in such form as may be
specified by the Central Government:
(a) in a case where the goods are to be loaded by a person entrusting such goods, on the completion of such
loading; or
(b) in any other case, on the acceptance of the goods by it.

A railway receipt shall be prima facie evidence of the weight and the number of packages stated therein.
5. Carriage of dangerous or offensive goods (Section 67). No person shall take with him on a railway or
require a railway administration to carry such dangerous or offensive goods, unless (i) he gives a notice in
writing of their dangerous or offensive nature to the railway servant authorised in this behalf; and (ii) he
distinctly marks on the outside of the package containing such goods their dangerous or offensive nature.

6. Liability of railway administration for wrong delivery (Section 80). Where a railway administration delivers
the consignment to the person who produces the railway receipt, it shall not be responsible for any wrong delivery
on the ground that such person is not entitled thereto or that endorsement on the railway receipt is forged or
otherwise defective.

Responsibility of a Railway Administration as a Carrier of Goods. Sections 93 to 112 of the Railways Act,
1989 contain provisions on this subject. These provisions are summarised below.

1. General responsibility of a railway administration as carrier of goods (Section 93). A railway

administration shall be responsible for the loss, destruction, damage or deterioration in transit, or non-
delivery of any consignment (goods entrusted to a railway administration for carriage), arising from any
cause except the following, namely:
(i) an act of God;
(ii) an act of war;
(iii) an act of public enemies;
(iv) arrest, restraint or seizure under legal process;
(v) orders of restrictions imposed by the Central Government or a State Government or by an officer or authority
subordinate to the Central Government or a State Government authorised by it in this behalf;
(vi) act of omission or negligence of the consignor or consignee endorsee or the agent or servant of the consignor
or the consignee or the endorsee;
(vii) natural deterioration or wastage in bulk or weight due to inherent defect, quality or vice of the goods;
(viii) latent defects;
(ix) fire, explosion or any unforeseen risks.
Liability of a common carrier vis-a-vis the liability of a railway administration. The liability of a railway
administration is the same as that of a common carrier. In other words, even where any loss, destruction,
damage, deterioration or non-delivery is proved to have arisen from any one or more of the aforesaid nine cases, a
railway administration shall not be relieved of its responsibility unless it further proves that it has used reasonable
foresight and care in the carriage of the goods [Union of India v Orissa Textile Mills, AIR (1979) Ori. 165].
A railway administration, like a common carrier, is bound to carry the goods of every person who is willing to
pay the freight and comply with other requirements.

2. Delay or retention in transit (Section 95). A railway administration shall be responsible for the loss,
destruction, damage or deterioration of any consignment proved by the owner to have been caused by the delay or
detention in their carriage. The railway administration can, however, avoid liability if it proves that the delay or
detention arose for reasons beyond its control or without negligence or misconduct on its part or on the part of any
of its servants.

3. Owner’s risk rate or railway risk rate (Section 97). A consignment may be carried by a railway administration
either at owner’s risk rate or railway risk rate. Owner’s risk rate is a special reduced rate whereas railway risk rate
is an ordinary tariff rate. Owner’s risk rate is lower than the railway risk rate for the simple reason that the goods
in this case are carried at the owner’s risk. In case of owner’s risk rate, the railway administration is not
responsible unless it is proved that any loss, destruction, damage or deterioration or non-delivery of goods arose
from negligence or misconduct on the part of the railway administration or its servants.

4. Liability for damage to goods in defective condition or defectively packed (Section 98). Goods tendered to a
railway administration to be carried by railway may be (a) in a defective condition or (b) defectively packed. As a
result of these, goods are liable to damage, deterioration, leakage or wastage. If the fact of such condition or
defective or improper packing has been recorded by the sender or his agent in the forwarding note, the railway
administration is not responsible for any damage, deterioration, leakage or wastage unless negligence or
misconduct on the part of the railway administration or of its servants is proved.

5. Liability after termination of transit (Section 99). Whether the goods are carried at owner’s risk rate or
railway risk rate, the liability of the railway administration for any loss of goods within a period of seven days
after the termination of transit is that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act,
1872. But where the goods are carried at owner’s risk rate the railway administration is not liable for such loss,
destruction, damage, deterioration or non-delivery of goods except on proof of negligence or misconduct on the
part of the railway administration or any of its servants.
After seven days from the date of termination of transit the railway administration is not liable in any case for any
loss of such goods. Notwithstanding this provision, the railway administration is not responsible after the
termination of transit for the loss, destruction, damage, deterioration or non-delivery of articles of perishable
goods, animals, explosives and other dangerous goods.

6. Responsibility as carrier of luggage (Section 100). A railway administration shall not be responsible for the
loss, destruction, damage, deterioration or non-delivery of any luggage unless a railway servant has booked the
luggage and given a receipt therefor. Also it is to be proved that the loss, etc., was due to the negligence or
misconduct on the part of the railway administration or on the part of any of its servants.
In the case of luggage which is carried by the passenger in his own charge, the railway administration shall not be
responsible for the loss, etc., unless it is proved that the loss, etc., was due to the negligence or misconduct on the
part of the railway administration or on the part of any of its servants.

7. Responsibility as a carrier of animals (Section 101). A railway administration shall not be responsible for any
loss or destruction of, or injuries to, any animal carried by railway arising from fright or restiveness of the animal
or from overloading of wagons by the consignor.
8. Exoneration from liability in certain cases (Section 102). A railway administration shall not be responsible for
the loss, destruction, damage or deterioration or nondelivery of any consignment —
(i) when such loss, etc., is due to the fact that a materially false description of the consignment is given; or
(ii) where a fraud has been practised by the consignor or the endorsee, or by an agent of the consignor, consignee
or the endorsee; or
(iii) where it is proved by the railway administration to have been caused by, or to have arisen from -
(a) improper loading or unloading by the consignor, or the consignee or the endorsee, or by an agent of the
consignor, consignee or the endorsee;
(b) riot, civil commotion, strike, lock-out, stoppage or restraint of labour from whatever cause arising whether
partial or general; or
(iv) for any indirect or consequential loss or damage or for loss of particular market.

Carriage of Goods by Sea

Contract of Affreightment* A contract to carry goods by sea is called the “contract of affreightment” and the
consideration or charges paid for the carriage is called the “freight”. A contract of affreightment may take either
of the two forms, namely—
(i) a charter party, where an entire ship, or a principal part of a ship is placed at the disposal of merchant (known
as a charterer); or
(ii) a bill of lading where the goods are to be carried in a general ship and the person consigning the goods is
known as a shipper.

In both these contracts, the ship owner (the carrier) undertakes the responsibility of carrying the goods of a
consignor (i.e., either the charterer or the shipper) safely and securely to the destination.

A contract of affreightment—whether in the form of a charter party or a bill of lading — is governed by the
(Indian) Bills of Lading Act, 1856 and the Carriage of Goods by Sea Act, 1925.

Conditions Contained in a Contract of Carriage by Sea.

The terms included in a contract of carriage by sea are of two kinds. These are:
(i) Express terms, and (ii) Implied terms.

Express terms are those which the parties have specifically agreed to and embodied in the contract.
Implied terms are those which law implies in every contract of carriage by sea unless excluded specifically. There
are four implied terms:

(i) Implied warranty of seaworthiness. The ship owner, when he enters into a charter — party for a voyage
impliedly warrants that the ship is seaworthy. This is an assurance by the ship owner, at the time of entering into
the charter party, that (a) the ship is fit to encounter the ordinary perils of navigation during voyage and (b) to
carry the specific cargo.
This warranty of seaworthiness extends only to (a) seaworthiness at the time of sailing and (b) ‘fitness at the time
of loading the cargo. Once the ship has sailed or the goods are on board, this warranty ceases to operate. But in
case the voyage is divided into stages, the ship must be seaworthy at the commencement of each voyage.

(ii) Implied warranty of commencement of voyage. Another implied warranty is that the ship shall be ready to
commence the voyage and shall carry out the same with all reasonable dispatch and diligence.

(iii) Non-deviation of voyage. Also there is an implied condition that there shall be no unnecessary deviation.
Deviation means the going off from the settled or the usual or customary course of voyage between the two
termini.
(iv) Shipper not to ship dangerous goods. The shipper (i.e., the consignor of goods in case the charterer
undertakes to carry goods of others under bills of lading) shall not ship dangerous goods. If the shipper ships
dangerous goods and if on account of it the charterer suffers any damage, he can recover it from the shipper.

Bill of Lading. A bill of lading is a document acknowledging the shipment of goods, signed by or on behalf of the
carrier and containing the terms and conditions on which it has been agreed to carry the goods. It is a quasi-
negotiable instrument. It is a document of title and can be transferred by endorsement and delivery. It is generally
used for the carriage of goods on a general ship, i.e., a ship which is used for the carriage of the goods of several
merchants who wish to have them conveyed by her and which is not employed for the carriage of a charterer’s
goods only. Lord Blackburn says, “a bill of lading is a writing, signed on behalf of the owner of the ship in which
goods are embarked, acknowledging the receipt of the goods and undertaking to deliver them at the end of the
voyage, subject to such conditions as may be mentioned in the bill of lading. It is sometimes an undertaking to
deliver the goods to the shipper by name, or his assigns, sometimes to order of assigns, not naming any person
which is apparently the same thing and sometimes to a consignee by name or assigns, but in all its usual forms it
contains the word assigns”.

A bill of lading may be issued even where the ship is chartered. In such a case charter party will be the document
evidencing the contract of affreightment, while the bill of lading would only operate as a mere acknowledgement
of the receipt of the goods.

The Carriage by Air (Amendment) Bill, 2007

PART A: HIGHLIGHTS OF THE BILL1

Context
The 1929 Warsaw Convention created a global regime of limited liability for international air transportation. The
Warsaw Convention (and amendments including the Hague Protocol of 1955) established a system of standard
rules for international air carriage, particularly in regard to liability arising out of the death or injury of
passengers, the damage or loss of baggage or cargo, and delayed carriage. The Carriage by Air Act, 1972 ratified
the Warsaw Convention and the Hague Protocol to become part of Indian law.
According to the Bill’s Statement of Objects and Reasons, the International Civil Aviation Organisation (ICAO)
“took the initiative and carried out a socio-economic study with a view to revising the levels of compensation and
modernising the existing liability provisions.” These meetings led to the adoption of the Montreal Convention,
1999, which entered into force on November 4, 2003. 78 countries have ratified the Montreal Convention.
The Carriage by Air (Amendment) Bill, 2007 is India’s ratification of the Montreal Convention, thereby enforcing
the provisions of this agreement on all international air carriers in India.
Key Features
Application of Montreal Convention

• The Bill updates the Principal Act to include the Montreal Convention, or “the unification of certain rules for
international carriage by air” signed on May 28th, 1999. The Bill makes the Montreal Convention legally
binding in India for any international carriage by air regardless of the nationality of the aircraft.

• The central government may, through notification, apply the rules of the Montreal Convention to domestic
carriage by air, with exceptions, adaptations and modifications, if any.

High Contracting Parties

• The Bill includes three annexures of the signatory countries (called High Contracting Parties) and date of
enforcement of the Warsaw Convention, the Hague Protocol, and the Montreal Convention, respectively. The
Bill allows the central government to add to or omit from the list of states through a notification.

• The rules of the Montreal Convention apply to all international carriage of persons, baggage or cargo carried by
aircraft for fee. The departure and destination points must be in different signatory countries, or if they are
within one signatory country, there must be an agreed intermediate stop-over in another country.

• In cases where either the country of departure or destination has not ratified the Montreal Convention but both
have ratified the Warsaw Convention or the Hague Protocol, that Convention or Protocol will be applicable.

• Carriers of postal items are only liable to the rules of the relevant postal administration.

Documentation and Duties of Carriers

• The Montreal Convention allows individual or collective documents of carriage to be delivered by electronic or
any other means. The carrier is required to offer a written statement of the same to the passenger or consignor.
This effectively enables e-tickets, and electronic forms for cargo receipts and air waybills.

• • An air waybill or cargo receipt must be delivered for carriage of cargo. The Montreal Convention specifies the
information the receipt must contain. It is the responsibility of the consignor to include all documents
necessary for customs, police and any other public authorities.

• Upon arrival of the cargo, the carrier must inform the recipient of arrival, and the recipient may require the
carrier to deliver the cargo on payment of the charges and complying with the conditions of carriage.

Liability of Carrier and Extent of Compensation for Damages

• In the case of destruction, loss or damage to cargo during the period in which the cargo is in the charge of the
carrier, the carrier will be liable. However, the carrier will not be held liable if the destruction resulted from

(a) an inherent defect of the cargo, (b) defective packing by a person other than the carrier, (c) an act of war or
armed conflict, or (d) an act of public authority related to the entry, exit or transit of the cargo.

• The carrier is liable for damage due to delay in carriage by air of passengers, baggage or cargo. However, the
carrier will not be liable if it can prove it took all possible measures to avoid the damage.

• In case of the delay, destruction, loss or damage of part of the cargo, the liability of the carrier will be
determined on the total weight of the concerned package(s).

• A carrier may increase its limit of liability or have no limits,, but may not lower or relieve themselves of it.

• The International Civil Aviation Organisation will review the limits of liability for carriage by air every five
years. The Montreal Convention also specifies how the ICAO will determine the inflation factor.

• In case of damage, the person must make a complaint in writing to the carrier within 14 calendar days of receipt
of cargo, and in the case of delay, within 21 calendar days of receiving the cargo. Nonreceipt of the complaint
within these periods is evidence that it has been delivered in accordance with contract.
• Countries that have ratified the Convention must require their carriers to maintain adequate insurance covering
their liability under it, and a carrier may be required to furnish evidence of such insurance.
Action for Damages
• A claimant may take action for damages in the territory of one of the signatories to the Convention either (a)
before the court of the domicile of the carrier, (b) the carrier’s principal place of business, (c) where it has a
place of business through the contract, or (d) the court at the place of destination.
• The parties to the contract of carriage for cargo may agree in writing that any dispute relating to the liability of
the carrier for cargo shall be settled by arbitration. The claimant has the same choice for the location of
arbitration proceedings as detailed above.

• Action for damages must be taken either within two years of the incident.

Combined Carriage

• In the case of combined carriage, these rules apply only to the part of the carriage that was by air.

Carriage by Air Performed by a Person Other than the Contracting Carrier

• If a carrier contracts another carrier to perform the carriage by air, the contracting carrier is still subject to these
rules for the entire duration of the carriage, and the performing carrier only for his leg of the carriage. Any
action for damages may be brought against either or both of the carriers.

Table 1: Key Differences between the Current Act and the Proposed Bill
Provision Carriage by Air Act,
1972
Ticket documentation Airline must issue
passenger
documentation of travel
Provision of advance payment No such provision
Liability of air carrier for bodily injury Maximum compensation
or death of passenger for passenger death or
bodily injury: 250,000
francs (34,000 SDRs)
Max. liability for lost baggage Based on weight of
baggage (250 francs per
kg)
Location of jurisdiction Plaintiff’s options:
carrier’s ordinary
residence or principal
place of business,
establishment by which
the contract has been
made or at the place of
destination
Liability Insurance No such provision
Amendment Bill, 2007
Recognises the use of
electronic documents,
such as e-tickets
Provision for advance
payment in case of death
or bodily injury to
address immediate
economic needs without
lengthy litigation
2 tier liability system:
first tier: SDR 100,000.
Second tier, if fault of
carrier—unlimited
liability.
SDR 1,000
Extends permissible
location of jurisdiction to
include the country in
which the passenger
maintains principal
residence, as long as the
carrier operates in that
country
Requires all air carriers to
 carry liability insurance
Revising liability limits No such provision ICAO may review limits of
liability based on inflation