What is Transshipment?

In his poem, “The Theologian’s Tale,” Henry Wadsworth Longfellow speaks of two ships passing in the night. He is referring to two people whose lives intersect only for a moment, never allowing them to know what might have existed between them. 

When two ships pass during the day, a transshipment often happens. Transshipment takes place when cargo is passed from one vessel to another. This may happen while the boats or are docked or while the vessels are on the water. 

Transshipment may be used to avoid tariffs and sometimes evade the law. However,  it is also used to ship to countries that might not have big enough docks or just save money by combining a small shipment into a large shipment.

Reasons for Transhipment

There are some ports in the world that are too small to accommodate big cargo ships. They may have problems receiving important things like vaccines and other medications simply because ships cannot dock at their ports. If a boat is too big for a dock, it can always transfer its cargo to a smaller boat. 

If there is very low tide at a port, boats may not be able to dock there. A ship may transfer its goods to another vessel that will be in the area when the tides return to normal.

Transshipment can reduce cargo customization costs. There are some countries that require shippers to pack their goods in certain dimensions or to be packed in certain material. When products are transferred from one ship to another, that cargo can be combined with products on the receiving boat to meet that country’s custom standards. This can save a company money on custom costs. 

Problems with Transshipments

Although all the same paperwork is required when you are transhipping a product as it would be when you are using conventional methods, it can be very hard to track a package that has been transferred to another boat. It is not completely uncommon for a shipping container to get lost. 

Transshipping is often used for iniquitous purposes. People employ it to transport drugs from one country to another. It is often used to transport alcohol into the United States without paying required fees or meeting FDA standards. 

Transshipment is also used by the fishing industry to transport illegally caught fish to the United States. In addition to violating environmental laws, companies that catch fish illegally often violate human rights laws by trapping their fishermen at sea for months at a time.

There are also some import duties that can be avoided when a company uses transhipping. Tariffs are applied to certain products by order of a country’s government. If a company wants to send a product to a country that has a high tariff on what they sell, they may send the product to a country with no tariff on the goods. Shippers in that country will then relabel the product and send it to its intended destination. 

The fines for unlawful transshipment are hefty. If a person is caught making an illegal transshipment, they may have to pay $10,000 and face jail time.

Under the right circumstances, transshipment can be a way to reduce cost and get your product wherever it needs to go. You should never try to arrange for transshipment yourself. A professional freight forwarding company can do the job for you. They will have the know-how to make sure that everything goes smoothly, your package can be tracked, and the transshipment will be legitimate.

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Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.