Transshipment is the arrangement of a shipment to a intermediate destination first then to another destination.
Why is there a need for such arrangement?
Transshipment is commonly used when there is a need to change the mode of transport for the shipment. Like the truck shipment we handled, the consignee needed to change the mode from air to sea for cost savings as well as customs clearance at destination.
Transshipment is also arranged when there is a need to combine many small shipments into a full container to one destination to save on the costs. It could also be used to divide a large shipment into small shipments to many different destinations. This consolidation or deconsolidation is arranged by the logistics operator on behalf of the seller or the buyer. This helps the seller or the buyer to reduce their workload and concentrate on other more important job scopes.
Transshipment can also refer to the arrangement of the whole full container to change the port of discharge to another location. This usually takes place in transport hubs like Singapore where there is no need for customs checks or duties eliminating a major hindrance and additional costs for efficient transport. Different carriers have different methods and regulations of handling such shipments. Usually carriers only allow their own containers to be reused to transship to another location.
Transshipment also refers to the transfer of cargo from one vessel to another vessel for further transit to complete the voyage and carry the cargo to its ultimate destination. This can also apply to air, rail or even land shipments. It is usually used when there is no direct transport link between the seller’s and buyer’s countries. With globalization, moving anything anywhere is possible. However there may not always be a direct route. With transshipment, you are able to move your shipments literally to anywhere in the world. Transshipment may also be done if the intended port of entry is blocked, or as a means to hide the identity of the port. This may be due to limitations of some terms and conditions in purchase orders or letters of credit. Using this method, you can ensure that your source of your goods are not known to your buyers too.
Are there any limitations?
Transshipment is a common practice with logistic benefits, but can be used to illegitimately to disguise country of origin or intent of the goods. Transshipment is commonly used by smugglers and terrorists seeking to disguise the point of origin of their goods from Customs officials. Certain countries like Libya, North Korea, and Syria are considered higher risk for security threats while countries like China and Taiwan are likely sources for counterfeit goods. Importers can transship goods both intentionally and accidentally. Intentional transshipment is done to avoid higher duty rates levied on certain countries, avoid import restrictions like visa and quota restrictions, or make use of a special trade program to drastically lower duty rates. It could also be done to avoid shipment being detained due to strained diplomatic relations between certain countries.
Accidental transshipment is usually caused by miscommunication between sellers and buyers. At times, many buyers do not recognize the need for properly declaring country of origin and see reduced duty rates as smart business. Foreign vendors typically do not have the in-depth knowledge of US Customs regulations to advise against the practice.
Transshipment however exposes the shipment to a higher probability of damage or loss. The simple reason being that the shipment needs to be offloaded and loaded from one mode of transport to another. During this operation, anything can happened. No one can be certain nothing will happen.
Is transshipment allowed in Singapore?
Singapore is one of the transport hubs in the region which handles many transshipment goods. Transshipment of all shipments is not subjected to duty or Goods and Services Tax. However it is important to note that there are regulations in place for the transshipment of controlled or prohibited goods in Singapore.
Do note that you are responsible for all the contents in the shipment arranged by transshipment. If there are any undeclared controlled or prohibited goods in the shipment, you will be penalized accordingly.