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The global trade is a complex affair. At times, one may not find direct transport to the destination while sometimes direct transport is expensive. That is when transshipment comes into the picture. Read on to learn about what transshipment is and how does it work.
What is transshipment?
The meaning of transshipment is the unloading of goods from a vehicle and loading in another vehicle before reaching its final destination. Such an intermediate location can be a warehouse, port, distribution centre, etc. The term transshipment is commonly used in global trade where maritime transport is extensively used. Intermediate unloading can be done due to various reasons. For detailed explanation examples of transshipments are given below:
Reasons for transshipments
Why does transshipment take place? Here are some of the common reasons for transshipments explained with examples.
- No direct link between destinations: If there is no direct linkage between the place of origin and the point of destination, transshipment becomes a necessity. For example, goods are to be arrived at a port City via marine transport. They are to be unloaded for an intermediate time before they are picked up by a truck for further transportation.
- Reduce costing: Sometimes it may happen that although a direct link between two destinations is available, it is more economical to use a multimodal transport.
- Multi-modal transport: If the cargo is to be transported via two or more modes of transport, for example, the cargo is scheduled to be transported from Point A to Point B via marine, while its final destination is Pont C. The cargo is to be transported from Point B to Point C via railway. Thereby, cargo can be stored in a port or railway terminal till the scheduled train arrives.
Example of transshipment
Here is an example of transshipment for better understanding.
The place of origin of cargo is Mumbai while the final port destination is Manila, Philippines. However, there is a direct vessel to carry goods to Manila is not available. Hence, goods will be loaded onto the vessel en route to Singapore, unloaded there and reloaded to the ship scheduled to Manila. In this case, Singapore is an intermediary halt, known as transshipment hub.
Meaning of transshipment hubThe intermediate location or port where goods are unloaded is known as the transshipment hub.
According to a report, the world’s busiest transshipment hubs include:
- Port of Singapore
- Port of Hongkong
- Port of Shanghai
- Port of Busan
- Port of Shenzhen
Difference between direct transportation and transshipment
Here are the key differences between direct transportation and transshipment.
|Definition||Goods are directly transported from the place of origin to the destination.||Goods are unloaded in the transshipment hub and reloaded to another transport vehicle en route to the destination.|
|Time||Comparatively, takes less time.||Involves a longer duration of transit.|
|Cost||It can be more expensive.||It can be comparatively cheaper.|
|Ports||Only two ports are used i.e. port of origin and destination port.||Three ports are used i.e. port origin, transshipment hub, and destination port.|
Points of transshipments
Process of transshipment
- Arrival of cargo: The cargo arrives at a port/location of transshipment.
- Unloading: Cargois unloaded from the vessel or the current mode of transport
- Storage: This is an optional step. Depending on the demand, cargo is moved to a warehouse or transshipment facility intermediary.
- Documentation: In the case of global trade, documents for the unloaded cargo are checked and inspected. In this case, documents such as custom declarations, bills of lading, etc., are checked.
- Loading: Goods are loaded on their next mode of transport.
- Final destination: Goods are then transported to the final destination.
Common problems and solutions in transshipments
Here are some of the challenges in the transshipments and their probable solutions.
1. Delays and disruptions
There are higher chances of delays and disruptions in the case of transshipments due to the involvement of multiple modes of transport and ports. Some of the problems that cause delays include bad weather conditions, political conditions, labour strikes, and so on.
Probable solutions: One can avoid transshipping in regions where unfavourable weather conditions are expected or politically unstable regions.
2. Shipping damages and losses
The cargo is vulnerable during handling. Hence, there are higher chances of shipping damages and losses during transshipments as the goods are handled, loaded and unloaded multiple times. Moreover, certain products such as medicines, vaccines, food items, etc., need to be kept in a temperature-controlled environment.
Probable solutions: Proper labelling of the goods is essential. Fragile goods need to be marked accordingly. Also, cartons have indications such as ‘This side up’, ‘Handle with care’ ‘Keep dry’, etc. to avoid damages during shipping and transit.
3. Increased cost
Transshipment is not always a cheaper option. Many times, transshipment is the only option due to the unavailability of direct transportation. Moreover, additional labour costs, infrastructure expenses, etc., may lead to an increase in overall logistics costs.
Probable solutions: In case the delivery timelines to your customers allow, you can enquire about the direct available transport by a later date.
4. Documentation and compliances
Probably, there is no escape from this. When transshipment is used, regulatory compliances such as custom processes, documentation, inspection, etc., can add to the hassle. Transshipment may require additional documentation like transshipment bill of landing, etc.
In the case of transshipment, tracking may become a challenge.
Probable solution: Using a trustworthy and reliable freight forwarder is necessary for ease of tracking.
About 90% of global trade takes place through water transport. However, finding a direct link to the port of destination can still be a problem. Therefore, transshipment is the recommended alternative. Earlier, tracking shipments was a challenge. However, with the use of advanced technologies, it has become a lot easier to track shipments and understand their locations.