Transshipment

What is Transshipment?

Transshipment is the transfer of cargo or containers from one vessel to another during transit to the final port of destination (POD). It typically occurs when direct shipping routes are unavailable.

For example, cargo may leave the port of loading (POL) on vessel A, be unloaded at a transshipment port, and then reloaded onto vessel B for delivery to the POD. While transshipment can cause delays or risks, it is essential for global trade, enabling connections across complex shipping networks.

Transshipment Challenges 

Transshipment operations can be challenging due to various reasons. One of the primary issues is the potential for cargo damage during transfer. Cargo handling equipment and procedures must be carefully managed to minimize the risk of damage. Additionally, transshipment operations can be delayed due to weather conditions, port congestion, or unexpected events, which can result in increased costs and potential supply chain disruptions. Finally, some ports may have regulatory or security requirements that can make transshipment operations more challenging.

What is the Purpose of Transshipment?

According to a report published by the United Nations Conference on Trade and Development (UNCTAD), “over 80% of the volume of international trade in goods is carried by sea.” This translates into more than 5,000 container ships transporting more than 34 million containers annually. Many of these ships don’t have the capabilities or availability for end-to-end shipments, which is one of the primary reasons for transshipments. Some other leading reasons are:

• Challenges with large vessels: not all ports can accommodate large vessels, which can make transshipment necessary. When containers are shipped in a large craft, they may need to be transferred to a smaller vessel to reach their intended destination. Transshipment allows for the efficient transfer of cargo from large vessels to smaller ones, ensuring that goods reach their final destination in a timely and cost-effective manner.
• No direct route: depending on the final destination, a shipment may be required to be shipped by two modes of transport. For instance, a shipment may be transported by road from point A to B and via sea from point B to C. Transshipment facilitates the transfer of goods from one mode of transport to another, ensuring that the cargo reaches its final destination.
• Reduced costs: direct shipping from one point to another is often costly, irrespective of the port. Transshipment may take longer, but it ensures that transportation costs are minimized, making it more cost-effective.
• International politics: in some cases, transshipment can also be used to bypass trade restrictions or bans between countries. When exporters and importers want to trade goods despite the restrictions, they may choose to ship via a third country. Transshipment can facilitate such trade transactions by providing an alternative route for goods to reach their final destination.

Transshipment Ports

One of the major causes of transshipping delays is port congestion. However, despite the potential risks, transshipment remains a necessity for most major economies. To accommodate this need, certain ports in Europe have become transshipment hubs, with at least 25% of containers passing through their terminals being part of a transshipping voyage. 

Southern European ports – such as Valencia in Spain, Gioia Tauro in Italy, and Algeciras Bay in Gibraltar – have even higher transshipment volumes, with as many as 75% of their yearly container outage being part of a transshipment. However, the five busiest ports in the world are in Asia:  

1. Singapore port
2. Shanghai port
3. Shenzhen port
4. Busan port
5. Hong Kong port

All of these transshipment ports play a vital role in the global trade network, enabling businesses to move cargo more efficiently and effectively.

Tracking Transshipments 

Transshipments are a critical aspect of the shipping industry, but they can cause delays and other challenges during transshipments. These delays can occur for a variety of reasons, such as late arrivals, ineffective terminal services, or delays at the point of departure. These delays can lead to lower asset turnover and dissatisfied customers, both of which can negatively impact a business.

It’s important to track the transshipment, so you can keep your customers updated to any delays. One way to track transshipments is to visit the carrier’s website and enter the Bill of Lading (BoL) number. This process can be time-consuming and it does not allow the storage of container information on the website. A more efficient way to track transshipments is by advanced AI technology. You can receive automated and real-time updates on container movements, enabling businesses to monitor their cargo’s movement efficiently.

The primary benefits of an AI solution are:

• Automated tracking: easily access the details of the entire route, including transshipments, by tracking through booking reference, BoL number, or container number.
• Real-time updates: stay updated on all container movements with extensive mapping and geofencing alerts on all container berthing terminals.  
• Cost savings: by efficiently tracking transshipments, businesses can minimize the impact of delays and reduce asset turnover, resulting in cost savings.
• Improved customer communication: businesses can inform their customers of delays in advance, building trust and understanding with their clients.