Transshipment

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Transshipment or Transhipment is the shipment of goods or containers to an intermediate destination, and then from there to yet another destination. This logistics operationd could be also named as re-exporting. The term of art for re-exports in official U.S. trade data is “foreign exports.” Transshipment has become an integral part of the logistic strategy of many shipping companies. Indeed, from its origin to its final destination, any given cargo might have be transshipped three or four times. Transshipment can be viewed as routing goods in such a way that would decrease shipping costs, take advantage of economies of scale and improve the range of services or routes offered to customers. In particular, transshipment services provide shippers with additional routing options (especially towards final destinations at smaller ports) and reduced transit times.[1] Earlier, before the development of large oceangoing container ships, transshipment was simply an induced operation when a small part of the cargo on the board of a vessel had to be unloaded in an intermediary port due to different destination of the main cargo on the board. Now, the transshipment operations are competitive forces to decrease container unit costs have led to the emergence of a worldwide hub-and-spoke system of shipping routes.[2] Cargo to a region is delivered first to a primary hub port using large ships and then transported or transshipped to its final destination (spokes) using smaller ships. Conversely, the hub can also serve as a transshipment point for cargo originating from its regional spokes and destined to other regions of the world. In the transshipment configuration, major routes (between regional hubs) are serviced by great ocean-going container liners allowing them to achieve considerable scale economies.[3] Smaller ships then provide faster feeder services on inter-regional short routes or other low traffic routes. It has been contended that transshipments offer an efficient way of serving smaller ports/countries and provide many more port-to-port connections to shippers than direct services.[4] In fact, with the hub and spokes system, carriers can provide shipping service virtually between any two ports not connected by a direct service

The level of transshipment through a given port or a country is in general the result of strategic decisions made by the shipping companies themselves. In order to satisfy the demands of carriers, transshipment ports need to satisfy a number of attributes:[1]

  • Availability of an array of high-frequency feeder services, connecting the hub with its network of feeder ports
  • Convenient geographical location with access to major trade routes and other transshipment centers
  • Efficient, highly productive and competitively priced port and terminal services
  • Availability of modern high-tech infrastructure (e.g., berths, gantry cranes, container storage space) as well as equipment that allows for a quick turnaround time of large vessels

References

  1. 1.0 1.1 Andriamananjara, S., Arce, H., Ferrantino, M.J. Transshipment in the United States. - U.S. International Trade Commission, Office of Economics, Washington, DC, 2004 - http://usitc.gov/publications/332/working_papers/ec200404b.pdf
  2. Hoffmann, J. Concentration in Liner Shipping: Causes and Impacts, World Sea Trade Service Review, Volume 1, Third Quarter 1998.
  3. Clark, X., Dollar, D., Micco, A. Port Efficiency, Maritime Transport Costs, and Bilateral Trade., NBER Working Paper 10353, March, 2004
  4. Damas, Ph. Transship or direct: a real choice? - American Shipper, Vol 43, No. 6, June, 2001.
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