What is Transshipment?

Transshipment is a supply chain process that involves the transportation of cargo or containers from one vessel to another to reach the final port or destination. In simple words, a shipment is moved to an intermediary location from its point of origin before reaching its ultimate destination.

In order to do this, a package or shipment first needs to go to a transshipment hub. This generally happens for large shipments with longer routes. Transshipment is important as it allows shippers to select the best mode of transportation for each leg of the journey by considering the various factors such as cost, availability, speed and distance.

The transshipment process involves crucial key steps in the shipment journey. Below is the breakdown of the cargo shipment process:

-Cargo Arrival

To begin the transshipment process, the cargo or package first arrives at the origin port, where the transportation journey starts. At this origin port, the cargo is checked to ensure everything in the package is correct.

-Cargo Loading

Once the cargo is checked and meets the shipping requirements, it is loaded into the vessel, which will take it to another hub or port, also known as a transshipment port.

-Cargo Transportation

The shipment is transported to the transshipment hub, from where the cargo is transported to its next destination.

-Cargo Unloading

When the cargo arrives at the transshipment port, it is taken off from the origin ship and stored at the port until it is ready to be transported to the next vessel.

-Customs and Documentation

Usually, at the transshipment hub, customs officials check the cargo to ensure that all the documentation is correct. Only after a thorough inspection can the cargo be loaded onto the next ship.

-Cargo Transfer

After the customs official verifies it, the shipment is loaded onto the next vessel to be transported to the nearest hub to the destination port. Many times, the shipment is also transported via different modes of transport, such as trucks, planes, etc.

-Next Vessel Loading

When the cargo arrives at the nearest port, it is transported to the final destination. The cargo is first unloaded here and then inspected by the officials. It is then loaded back again into a new vessel, which will take it to the destination port.

-Cargo Delivery

When the shipment arrives at the destination port, it is taken off the vessel and checked by the port authority. It is then delivered where it needs to go.

Let us understand the cargo transshipment process by example. Person A has to transport goods from Mumbai, India, to Manila, Philippines. However, since no direct vessel is available to transport the cargo, Person A has decided to go with the transshipment process.

The cargo will be loaded onto a vessel to reach the Singapore port, which acts as a transshipment port. Upon reaching the Singapore transshipment hub, the cargo will be unloaded and undergo the customs inspection and documentation process.

Then, the cargo will be loaded into the next vessel, which will go to the Manila port. Upon reaching the Manila port, the cargo will be unloaded and delivered to its destination.

There are a wide array of reasons why transshipment is necessary for the transportation of goods. Some of the reasons are listed below:

-Geographical Constraints

One of the key reasons for adopting the transshipment process by shippers is to overcome geographical constraints. Often, the final delivery location of goods is inaccessible by land or ocean transportation. In such cases, transshipment to the nearest port, which is accessible to the final destination, becomes a practical solution.

-Security Concerns

Another reason for using a transshipment process while transporting goods is security concerns. Transporting goods to the destination points directly sometimes involves various challenges such as customs rules and regulations, risk in routes, etc. Therefore, to avoid risks, shippers go with a cargo transshipment.

-Political or Legal Restrictions

Transshipment is also used to bypass trade embargoes. Certain types of shipments are subject to various political and legal restrictions in certain areas. To avoid the legal and political repercussions in those areas, the transshipment process is included, making it a strategic tool in international trade.

-Cost Savings

Another compelling reason for using customs transit and transshipment is the significant cost savings it offers. In most cases, transporting goods to the final destination directly is expensive compared to using the transshipment process, providing a reassuring economic benefit.

-Variation in Modes of Transportation

Cargo transshipment becomes crucial when shipment is transported using two or more than two modes of transportation. For instance, if a cargo is transported from point A to B via rail and then it is transported from point B to C via sea, then in such a case the transshipment process is much more economical.

International container shipment terminals are another important element in the transshipment process for goods and cargo transported globally. These container transshipment terminals are basically inside the transshipment ports. They are strategically located to allow seamless movement of goods to remote areas.

It helps shipping lines optimise their routing strategies and vessel deployment based on shipments. This minimises transit times and makes transporting goods more economical.

In addition, the international container transshipment terminal offers comprehensive services that include documentation processing, cargo tracking, customs clearance and much more.

Below are some of the major transshipment ports in the world.

-Port of Shenzhen

The port of Shenzhen is the consolidated term used to refer to the ports located at the coastline of the Shenzhen region of China. These ports are Chiwan, Shekou, Yantian and Dachan Bay. It is one of the busiest ports due to its proximity to various tech companies. The port handles major cargo volumes due to its technological advancement and strategic location.

-Port of Hong Kong

Another transshipment port is the Port of Hong Kong, which is known for its historical significance and facilities. The port is old and offers various facilities for dry docking, ship maintenance and repair, etc.

-Port of Singapore

Another popular busiest port in the world is Singapore, which has connections to over 600 other ports in various countries. The port transfers around 20% of the world's shipping containers. It has the flexibility to handle 130,000 vessels annually.

-Port of Busan

This transshipment port in South Korea is a major hub for transporting goods. The port is equipped with a feeder vessel network that connects Japan, Russia and China. Due to this, it attracts large shipments from all over the world.

In the shipping business, transshipment is a crucial way to transport goods from one place to another when there is not a direct route available. Furthermore, the transshipment process is also included because it is way more economical than direct transportation.

It also helps avoid the legal and custom complexities involved in direct transportation. By knowing all about the cargo transshipment, businesses can manage their shipments in a better way.

However, another crucial aspect businesses need to consider is investing in a marine insurance policy to protect their financial assets from unforeseen damages and losses during transit. Various things can go wrong in the shipping business, hence the availability of marine insurance in India.

TATA AIG offers various marine insurance plans tailored to meet businesses' unique requirements. We offer a marine open policy that covers cargo over multiple shipments over a year. Visit the website to learn more about our customisable and cost-effective marine insurance plans.

Is transshipment illegal?

Transshipment itself is not illegal; it is the process of transferring goods from one ship or mode of transport to another. However, if used to circumvent laws like evading tariffs or smuggling, it can become illegal.

Is cargo transshipment taking more time than direct transportation?

Yes, cargo transshipment typically takes more time than direct transportation. This is because goods need to be unloaded, stored temporarily and reloaded onto another vessel or transport mode, leading to delays compared to a direct, continuous journey.

Are there any challenges in cargo transshipment?

Yes, cargo transshipment faces challenges like delays due to multiple handling points, increased risk of damage or loss and complex coordination across ports and transport modes.