Transhipment is when goods are transported to an intermediate location before reaching their final destination. It is used for various reasons, including breaking up bulk shipments and reducing costs. However, there are risks involved, and fraudulent reasons for transshipment can include hiding the country of origin or evading taxes.
Transhipment is a shipping activity where goods are transported to a third party or intermediate location before being sent to their final destination. There are a wide variety of reasons shippers engage in this business, and some ports and rail hubs specifically design and market themselves to be friendly to transshipment businesses for the convenience of shipping carriers. Trade regulators and other government officials can closely monitor these locations because while there are legitimate reasons for transshipment, fraud can sometimes be involved.
One of the most common reasons for using transhipment is that it is not possible to move a cargo from origin to destination in one leg. This may be because a destination port is closed or temporarily embargoed, because no shipping method goes from one point to another, or for a variety of other reasons, such as bad weather preventing a shipment from passing . Changes in shipping methods as goods are moved from boats to trains to trucks can also be a reason for transshipment.
Some shippers ship in bulk from their origins to transshipment centers, then break up the loads into smaller loads for several individual destinations. This can be cheaper than sending the goods direct, especially if the origins or destinations are remote or difficult to access. Similarly, multiple shippers can pool resources on a transshipment project in order to reduce costs associated with shipping and ensure their goods arrive efficiently at the other end.
There are risks associated with transshipment, including an increased chance of loss or damage. Special insurance may be required to cover goods being shipped and in some cases shippers may be specifically instructed not to transship goods due to security concerns. Whenever goods stop or are moved, vulnerabilities are created, especially if the goods have to be stored or temporarily stored, and this can lead to concerns about the safety of a shipment.
Fraudulent reasons for using transhipment include a desire to hide the country of origin on a shipment or attempts to evade taxes, tariffs and other penalties. You can hide the country of origin by shipping the goods to a third party and then redoing the shipping labels to make it appear that the cargo is from a third party. This can be done to evade embargoes, move contraband or illegal products, and for other reasons.
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