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What is Transshipment?

Mary McMahon
By
Updated May 17, 2024
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Transshipment 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 for shippers to engage in this activity and some ports and rail hubs specifically design and market themselves to be friendly to transshipment activities for the convenience of shipping carriers. Trade regulators and other government officials may monitor these locations carefully because while there are legitimate reasons to transship, fraud can sometimes be involved.

One of the most common reasons to use transshipment is that it is not possible to move a cargo from the origin to the 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 the other, or for a number of other reasons, such as inclement weather that prevents passage of a shipment. Changes to shipping methods as goods are moved from boats to trains to trucks can also be a reason for transshipment.

Some shippers make bulk shipments from their origins to transshipment centers, and then break the loads up into smaller loads for different individual destinations. This can be cheaper than sending the goods directly, especially if the origins or destinations are remote or difficult to access. Likewise, multiple shippers may pool resources on a transshipment project in order to cut costs associated with shipping and make sure that their goods arrive efficiently at the other end.

There are risks associated with transshipment, including a greater chance of loss or damage. Special insurance may be required to cover the goods being shipped and in some cases shippers may be specifically ordered not to transship goods because there are concerns about security or safety. Every time goods stop or are transferred, vulnerabilities are created, especially if the goods need to be warehoused or stored temporarily, and this may generate concerns about the safety of a shipment.

Fraudulent reasons to use transshipment include the desire to conceal the country of origin on a shipment or attempts to evade taxes, tariffs, and other penalties. Concealing country of origin can be accomplished by shipping goods to a third party and then redoing the shipping labels to make the load appear to be originating from the third party. This may be done to evade embargoes, move smuggled or illegal products, and for other reasons.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a About Mechanics researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By indigomoth — On Nov 25, 2011

I do this sometimes in miniature because there are quite a few American companies out there which will not send to international addresses.

There is a company which will provide you with an American address in order to give you somewhere to ship to and will then repackage your goods and send them on to you. It's not very cheap though, so I think it's only really worth it if you get a lot of things from American companies.

Luckily I have a friend in the States who will let me send things to her and will send them on to me if I ask her to. But, before I met her, I used the company and found them quite effective at transhipment.

By croydon — On Nov 24, 2011

@anon111720 - I imagine the only way to ensure that fraudulent transshipments don't occur is to be very vigilant at tracing goods back to their point of origin.

Even if they have false receipts, most criminals won't bother to do more than make the receipts, so if you look up the company the papers are supposedly from, they either won't exist, or they won't have records of these particular goods.

You might have to go back quite far in order to trace where the goods really came from, but I imagine there are people who know how to do this and have the contacts to make it easier.

On the other hand, corruption can make it quite difficult, so I'm sure quite a few goods manage to slip by any kind of net put up to catch them.

By anon111720 — On Sep 17, 2010

How would authorities be able to stop fraudulent transhipment?

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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