Transshipment: impact on transit types and reliability explained

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the impact of transshipment on transit types and reliability

International transportation of goods can span weeks or even months. From its point of origin to its final destination with the end customers, the cargo often passes through multiple transshipment points. Consequently, any delay at one of these points can significantly extend the overall transit time, potentially impacting the schedule as communicated by the carrier or shipper. This article provides insights into the influence of transshipment in transit times and the reliability of delivery commitments.

What is the role of transshipments in global shipping?

In the context of international shipping, transshipment refers to the process of transferring freight from one mode of transportation at an intermediate location or hub. Multiple constraints can necessitate one or more transshipments during a cargo’s global journey:

  • Transportation mode switching: When a direct transportation link is unavailable between the point of origin and the final destination, transshipment is necessary to switch the cargo to an appropriate transportation mode. For example, if the final destination cannot be reached by sea, a transshipment must be arranged at the port of discharge, prior to transferring the goods onto a train, barge, or truck for inland transportation.

 

Hence different types of transshipments are possible. Additionally, this process may encompass the use of various routes and terminals (seaports, airports, rail yards, truck terminals, distribution centers…).

different types of transshipment exist

Cargo is consolidated or unconsolidated at major transportation hubs, such as large ports or airports.

Containers from various origins and destinations are often consolidated at major hubs for more efficient transportation and routing. For instance, a smaller feeder vessel may visit multiple Chinese ports before transferring all containers bound for North America onto a larger vessel with greater capacity for long-haul transport (often referred to as a “mother” vessel) destined for either the United States West Coast or East Coast. Similarly, containers from diverse Asian container ports may be discharged at a major hub port by their respective feeder vessels, where they are loaded onto larger vessels bound for Europe.

Consolidation: This process involves breaking down smaller shipments and combining them into larger ones, which helps reduce shipping costs and optimizes transportation resource utilization. This practice is common for LCL/FCL shipments. Rather than shipping numerous small cargoes separately, vendors, logistics service providers, or freight forwarders consolidate them within a container. LCL (Less than Container Load) shipments are thereby transformed into FCL (Full Container Load) shipments.

Cargo splitting: Conversely, freight may be divided into smaller shipments at a transshipment point to be sent to multiple destinations. This process transforms a Full Container Load (FCL) shipment into several Less than Container Load (LCL) shipments.

  • Direct transshipment: cargo is transshipped directly from one vessel to another without any intermediate storage or processing, minimizing delays and handling.
  • Intermodal transshipment: cargo is transferred between different modes of transportation to continue its journey: ships to train, train to truck, or ships to barge, or even from train to ship or airplane to reach its final destination when there is no direct transportation link between the origin and destination.
  • Maritime-to-maritime transshipment: Containers are transferred from one maritime vessel to another, often at a different port or along the route to optimize cargo distribution or accommodate vessel schedules. The cargo transfer between different vessels may happen at sea at a designated offshore “midstream point.”

  • Maritime-to-inland transshipment: Cargo may need to be transferred from a maritime vessel to an inland mode of transportation, such as trucks, trains, or barges, to reach an inland destination or distribution center.

  • Inland transshipment: Operations occur entirely on land, typically involving the transfer of cargo between different modes of inland transportation, such as from trucks to trains or vice versa.
  • Cross-dock transshipment: The cargo is quickly transferred from one transport vehicle to another, usually with minimal storage time. This is often used to speed up the distribution process.

  • Buffer transshipment: cargo is temporarily stored at transshipment points, often for short periods, to balance supply and demand or manage fluctuations in the shipping schedule.

The choice of transshipment type depends on various factors, among which are the nature of the cargo, and its specific requirements, the transportation routes, and the infrastructure available. Each type serves a specific purpose in optimizing the movement of goods across the logistics supply chain.

How does the transshipment impact transit time and reliability?

impact of transshipment on supply chain lead times

The impact of transshipment on supply chain lead times and overall reliability can vary significantly, depending on several key factors:

It varies based on the specific requirements of the cargo. In cases where a container must be transferred from one vessel to another, it is offloaded at a port and temporarily stored at a container yard, where it awaits the vessel that will transport it to the next transshipment port or directly to its final destination.

However, in the context of an intermodal shipment, the container may need to be transported to the opposite side of the port to reach a rail yard. In some instances, it may even necessitate transportation beyond the maritime port to an inland transshipment hub located within a city.

This implies variable duration for the transshipment, ranging from as little as 48 hours to potentially several days. The extent of delay primarily hinges on the effectiveness and coordination among various stakeholders, including port operators, customs authorities, shipping lines, and truck owners

The more times cargo is transshipped, the greater the potential impact on transit types and reliability. Each transfer introduces the risk of delays, mishandling, and additional handling costs. Reducing transshipment frequency can help maintain transit reliability.

  • Infrastructure and handling

The efficiency and capacity of transshipment infrastructure, including handling equipment and processes, play a crucial role. Well-designed and well-maintained facilities ensure port performance, which in turn, minimize disruptions and delays.

  • Weather and environmental factors

Transshipment ports are often located in regions prone to environmental factors such as hurricanes, typhoons, heavy rainfall, strong ocean currents, high waves, or snowstorms. These adverse conditions can disrupt the smooth handling operations at the port and vessel movements, increasing the risks to the crew, equipment, and cargo, which could potentially result in delays. In areas with high shipping traffic, just a few days of interruption can lead to severe port congestion.

This is a common occurrence in some of the world’s busiest ports, which are also particularly vulnerable to extreme weather conditions. These ports include, among others, those in China (Shanghai, Ningbo Zhoushan, Shenzhen, Guangzhou), Singapore, Indonesia (Tanjung Priok), Thailand (Laem Shebang), Malaysia (Port Klang), and the USA (Long Beach, Los Angeles, New Jersey, and New York), Netherlands (Rotterdam), etc.

  • Documentation and communication

Accurate documentation and effective communication between transportation providers at transshipment points are crucial for maintaining transit reliability. Mistakes or miscommunication can result in errors or delays, particularly during the customs clearance phase or when transferring goods to another stakeholder.

  • Security and risk

While cargo is unconsolidated, consolidated, or stored at transshipment points, it becomes vulnerable to theft, tampering, or damage. Such incidents might disrupt all logistics planning, because of the formalities involving various stakeholders (cargo owner, port authorities/operators, warehouse team, shipping companies, customs agents, insurer agents, and experts to assess the extent of damage).

Moreover, the loss of goods that were intended to be loaded into other containers or on different vessels requires the change of stuffing plans, among other issues. Consequently, the transfer of goods may experience delays, thereby impacting transit reliability.

  • Regulatory and customs constraints

Different countries and regions may have varying regulations and customs procedures at transshipment hubs. Complying with these regulatory obligations may necessitate obtaining additional documentation, completing online declarations, undergoing physical inspections, and more. These procedures can impact transit times and overall reliability.

How to limit the transshipments on global transit time?

Transshipment is essential for lengthy international shipments, as it facilitates the utilization of specialized transportation modes and optimizes transportation routes. However, it also introduces potential delays, costs (handling fees, storage fees, demurrage, and detention charges…), and risks.

Some strategies have to be implemented in order to minimize the adverse effects of transshipments on global transit times and enhance the reliability of international shipping operations. On a broader scale, this contributes to the efficiency of the transportation network and the entire logistics supply chain.

  • Opt for direct routes whenever possible or choose major, well-connected hubs with efficient operations to minimize unnecessary transshipments and reduce delays.
  • Collaborate with reliable ocean carriers and logistics providers with a proven track record of efficient transshipment operations and on-time deliveries.
  • Establish contingency plans to address unexpected delays or disruptions, such as adverse weather conditions or labor strikes, which can impact transshipment operations.
  • Leverage modern technologies such as electronic data interchange (EDI), artificial intelligence, IoT sensors, big data analytics, machine learning, satellite connectivity, and internet connectivity for cargo tracking. Real-time visibility of freight and the entire supply chain allows for proactive risk and delay identification and swift resolution.
  • Efficiently plan operations and maintain close coordination with all stakeholders to promptly resolve issues. This entails maintaining open communication and real-time data and information sharing among remote parties through centralized interfaces.
  • Use standardized packaging methods to streamline handling and minimize the need for repacking or reconfiguration during transshipment.
  • Ensure that all necessary documentation, including customs clearance, is meticulously prepared and processed to prevent delays during transshipment.
transshipment in international shipping

More articles will be released in the near future that will delve deeper into the solutions to mitigate issues associated with transshipment in international shipping.

Frequently Asked Questions about Transshipment

In international shipping, transshipment involves transferring cargo from one mode of transportation at an intermediate location or hub.

This process can occur for various reasons, including switching transportation modes, consolidation of cargo at major hubs for efficiency, cargo splitting, and more. The choice of transshipment type depends on factors like cargo nature, transportation routes, and available infrastructure.

The impact of transshipment on transit times and reliability varies based on factors such as the nature of transshipment operations, transshipment frequency, infrastructure and handling efficiency, weather conditions, documentation and communication, security and risk, and regulatory constraints. These factors can either extend transit times or enhance reliability, depending on their effectiveness and coordination.

To reduce the adverse effects of transshipments on global transit times and enhance shipping reliability, consider the following strategies:

  • Opt for direct routes 
  • Collaborate with reliable ocean carriers and logistics providers.
  • Establish contingency plans 
  • Leverage modern technologies 
  • Efficiently plan operations 
  • Use standardized packaging methods
  • Ensure meticulous preparation and processing

Delays in transshipment can result from factors like inefficient coordination among stakeholders, adverse weather conditions, security risks, regulatory compliance, and documentation errors. The duration of delay can range from as little as 48 hours to several days, depending on these factors.

Transshipment is essential for international shipments because it enables the use of specialized transportation modes, optimizes routes, and facilitates the movement of goods across the supply chain. While it introduces potential delays and risks, strategic transshipment is crucial for the efficiency of the transportation network and the logistics supply chain.

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