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What is transshipment? Know the meaning, types, and process

Transshipment is the transfer of cargo from one shipping vessel to another at an intermediate port in a different country. In this blog, learn about its process in the blog.

Ports around the world are not always directly linked, which can make it challenging to transport goods from their origin to the final destination using a single vessel or mode of transportation. This is where transshipment becomes essential. By optimizing the logistics chain, transshipment reduces shipping costs and increases the flexibility of moving cargo across international borders. In this blog post, we will explore how transshipment works, its benefits, and its role in global commerce.

What is transshipment?

Transshipment is the process of unloading cargo from one vessel and reloading it into another during its journey from the origin to the final destination. Goods may be moved from one mode of transportation to another (rail, road, sea, or air), or from one vessel to another within the same mode.¹

During transshipment, the containers are unloaded at the site, loaded onto a different vessel, and then transported to the final destination. This intermediate location where the transfer occurs is called a transshipment hub.²

What are the types of transshipment?

There are two main types of transshipment:

Silent transshipment

The cargo is transferred from one vessel to another without being unpacked. The new vessel then transports the goods to its final destination.

Active transshipment

The container is unloaded and the cargo is loaded on one or more vessels assigned to multiple destinations.³

Transshipment process

Below is the commonly followed transshipment process:

Cargo arrival:

Cargo arrives at the initial port of loading and is checked in for transport.

Cargo loading:

Cargo is loaded onto the initial vessel for transportation to the transshipment port.

Cargo transportation:

The initial vessel carries cargo to the port, where it is offloaded for transfer to the next vessel.

Cargo unloading:

Cargo is offloaded from the initial vessel and is held at the transshipment port for transfer to the next vessel.

Customs and documentation process:

At the transshipment port, customs and other regulatory authorities verify the cargo and ensure that documentation is in order for the transfer of cargo to the next vessel.

Cargo transfer:

Cargo is transferred to the next vessel for transportation to its final destination. This can involve loading it onto a new vessel or moving it to another mode of transportation, such as a truck or plane.

Next vessel loading:

Cargo is loaded onto the next vessel for transport to its final destination.

Cargo delivery:

The next vessel carries it to the final destination, where it is offloaded and delivered to the consignee^.4

Various factors can affect the efficiency of transportation throughout the process, including logistics, customs requirements, regulations, and security concerns. It is important for all parties involved in the transport to coordinate effectively to ensure that the process is completed without any hassles.

Need for transshipment in transportation of goods

There are several reasons why transshipment may be necessary in the transportation of goods:

Geographical constraints:

Sometimes, the final destination of a cargo shipment may be inaccessible by ocean or land transportation. In such cases, cargo must be transshipped to a port or location that is more accessible to the final destination.

Cost savings:

Transshipment It can often be a more cost-effective option for transporting goods. This is especially true when the cost of transporting goods directly to their final destination is expensive due to long distances or logistical challenges.

Security concerns:

In some cases, it may be necessary to transship cargo to avoid risks associated with certain routes or ports.

Political or legal restrictions:

Transshipment may also be necessary to avoid political or legal restrictions on certain types of goods or shipments. Hence, it is used to bypass trade embargoes or other regulations that restrict direct shipments.

Changes in modes of transport:

Transshipment is necessary when goods need to be transported using two or more modes of transportation. For example, a shipment may be transported by rail from point A to B and by sea from point B to C.⁵

Example of transshipment

Transshipment is often necessary when there is no direct route between two ports. For example, Durban (South Africa) does not have a direct connection to Manila. So, containers from Durban are initially sent to Singapore. From there, they are loaded onto another vessel for the final stretch to Manila. Singapore acts as the crucial transshipment hub, enabling the movement of containers from their starting point to the desired destination port.⁶

How to track transshipments?

Tracking transshipments can be complex due to the involvement of multiple parties and the potential for cargo to be transferred between different vessels and locations. Some of the strategies that can be used to track shipments and ensure that cargo is delivered to its final destination are:

Use a freight forwarder:

A freight forwarder can handle logistics of transshipment and provide tracking information throughout the process.

Electronic tracking:

Electronic or e-tracking systems can be used to monitor the movement of cargo and provide real-time updates on its location and status. This can include GPS tracking, RFID tags, and other technologies.

Documentation:

Detailed documentation can be used to track transshipments and ensure that all parties are aware of the location and status. This can include Bill of Lading, customs documents, and other paperwork.

Communication:

Effective communication between all parties involved in the transshipment process is essential for tracking cargo and ensuring that it is delivered to its final destination.⁷

Transshipment vs direct shipment

In the container shipping business, direct shipment is a more straightforward approach. In this method, a shipper’s cargo is loaded onto a single vessel at the origin port and delivered directly to the destination port. This method is generally faster and more reliable, but it can also be more expensive.

Transshipment, on the other hand, involves transferring cargo from one vessel to another at an intermediate port. This can be a more cost-effective option, but it also adds complexity and potential for delays.⁸

To sum up, transshipment plays a critical role in the global logistics network, facilitating the smooth flow of goods across international borders. This is particularly crucial for e-commerce exporters, who depend on swift and reliable shipping to serve customers worldwide. A dependable shipping partner ensures smooth handling of shipments, timely deliveries, and compliance with regulatory standards. E-commerce exporters on Amazon Global Selling can leverage Amazon's fulfillment solutions for seamless and hassle-free shipping.

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Frequently Asked Questions

What is the role of transshipment?

Due to port limitations or lack of direct routes between ports, it is sometimes not possible for a single vehicle to transport goods from the origin to its destination. This is where transshipment comes in. Transshipment refers to cargo transfer between different transport methods (like truck to ship) or between different vessels within the same mode of transportation, so that goods can be efficiently delivered to their final destination. Transshipment is often more cost-effective than direct shipment.

What are the advantages of transshipment?

Transshipment offers several advantages for businesses and the transportation industry:

● Cost-effective: It helps cut transportation expenses by consolidating cargo into larger shipments and utilizing more efficient transportation modes.
● Versatile: Transshipment provides flexibility in transportation choices, allowing cargo to move between different modes, routes, and locations as required.
● Accessibility: It overcomes geographical hurdles, providing access to markets that might otherwise be challenging to reach.
● Risk reduction: Transshipment helps mitigate risks related to particular routes or ports and circumvents political or legal constraints on specific goods or shipments.⁹

What is the difference between direct shipment and transshipment?

Direct shipment involves moving cargo from its point of origin directly to the final destination using a single transportation mode. The cargo is not transferred between different transportation modes or locations, and the entire transportation process is handled by a single carrier. Transshipment involves the transfer of cargo between different modes of transportation or locations to reach its final destination. This can involve moving cargo from a ship to a truck or from a truck to a train, for example, to get to a location that is not directly accessible by the original mode of transportation. It typically involves the involvement of multiple carriers and logistics providers.

What is the transshipment time?

Transshipment time refers to the duration it takes for cargo to be transferred between different modes of transportation or locations during the process. It includes the time it takes for cargo to be unloaded from the original transportation mode, moved to a different transportation mode or location, and then reloaded onto the new transportation mode.

What are the types of transshipment problems?

Some of the challenges faced during transshipment are:
· Delayed transfer
· Cargo damage
· Loss of cargo
· Customs clearance issues
· Capacity constraints
· Security risks
· Regulatory compliance¹⁰

How does a transshipment lead to shipping delays?

Some of the common ways that transshipment can lead to shipping delays include:
· Coordination challenges
· Customs clearance · Capacity constraints
· Handling and packaging¹¹

Published on February 23, 2023.

Sources:
1. https://www.dripcapital.com/en-in/resources/blog/transshipment
2. https://www.container-xchange.com/blog/transshipment/#what_is_transshipment
3. https://www.sevenseasworldwide.com/need-help/how-does-international-shipping-work/what-is-a-transhipment/
4. https://nimbuspost.com/blog/transshipment-an-ultimate-handbook/#
5. https://www.container-xchange.com/blog/transshipment/#what_are_the_reasons_for_transshipment
6. https://www.container-xchange.com/blog/transshipment/#how_to_track_transshipments
7. https://www.container-xchange.com/blog/transshipment/#how_to_track_transshipments
8. https://www.dripcapital.com/en-in/resources/blog/transshipment
9. https://dfreight.org/blog/transshipment-a-comprehensive-overview/
10. https://dfreight.org/blog/transshipment-a-comprehensive-overview/
11. https://dfreight.org/blog/transshipment-a-comprehensive-overview/

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