The role of transshipment in transportation

International shipping of goods requires long-distance transportation across borders to far-off locations. Sometimes, if the location is quite remote, intermodal transport is preferred. The transportation of goods from the port of origin to an intermediary port before going to the destination port is known as transshipment. At the intermediary port, the mode of transport may be changed based on the destination’s geography. Transhipment or cross-docking is a flexible, scalable and cost-effective solution for shippers but has its challenges.

Differentiate between direct shipment and transhipment

In direct shipment, goods are transported inside shipping containers directly from the origin port, station or hub to the destination. There is no intermediary port or hub involved in the voyage. In the case of transhipment, the shipping containers are shipped from their origin and then offloaded at an intermediary hub. These containers are reloaded into newer vessels and continue their journey towards the final destination. A few differences between direct shipment and transhipment are-

1. Direct shipment takes place using only one vessel or mode of transport, while transhipment involves two modes of transport as the containers change their initial mode at the intermediary port.
2. Only two hubs or ports are involved in the direct shipment, while three hubs or ports are involved in shipping goods in transhipment. The intermediary port is known as a transhipment hub.
3. Transhipment requires fewer investments than direct shipment, which is more expensive as it works by cargo consolidation and is often more time-consuming than direct shipment.
4. Direct shipments do not stop at any other ports or hubs; therefore, they deliver goods in a shorter time. In transhipment, the transport stops at various hubs or ports for unloading and reloading, which consumes time. Thus, the shipment takes a relatively long time to deliver goods.

Process of transhipment in the shipping industry

International shipments bound for geographical locations inaccessible by one mode of transport require the exporter to book another mode of transport to enable seamless delivery to the respective location. Transhipment or cross-docking refers to the transportation of goods from one point to another by stopping for a change of mode of transport at transportation hubs. Even if the mode of transport remains the same, shipping companies switch trucks, planes, trains, or vessels to take a different route. It involves intermodal transportation, so goods can be brought from point A to B through roads, rails, sea, or air and then loaded onto another transport at point B that goes to point C.

If the ports do not have the necessary equipment for cargo handling, such as forklifts, cranes, and AGVs, it may require shipping the goods to another port offering the required equipment. In such cases, a transhipment is required where shipping companies can transship goods from point A to B via trucks or trains, and the rest of the journey is completed by vessels.

Benefits of transhipment

1. Cost-effective- Shippers often choose transhipment to skip high customs clearance costs, tariffs, and import duties. Above it, transshipments are non-urgent cargoes that are delivered in more time. Therefore, the costs are lower.
2. Flexibility- Delivering goods at locations otherwise inaccessible by planes, trains, or ships is not feasible due to the lack of direct routes. Transshipment allows exporters to change the mode of transport to trucks as they are the best-chosen mode of transport for delivering to remote locations.
3. Scalability- In maritime shipping, larger ships carrying containers to far-off destinations cannot berth at smaller ports. So, instead, the goods are transshipped into smaller vessels.

Challenges in transhipment

While transhipment has a lot of perks to offer, it also comes with a few risks.

1. Cargo damage- Since the containers are being loaded and unloaded multiple times, the handling activities are increased, which may increase the risks of damage.
2. Loss or tampering of containers- When cargo containers are kept for transhipment, they are stored temporarily, waiting for their next transport. It gives opportunities for illegal activities.
3. Shipping delays- Transshipment is a time-consuming process, and any delays in the shipping activities can lead to significant delays. The unloading and reloading at hubs or transhipment ports are already time-consuming. Delays from either the origin or subsequent modes of transport often escalate them.

Although transhipment is a boon for the shipping industry, it also has impending challenges that hamper operational efficiency.

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