By Benny  Lim.     Photo：Victor Puente

In long-haul maritime shipping, there is often a distinction between direct routes and transshipment. Many customers prefer direct routes and believe they are always better and faster than transshipment. However, the definitions and differences between these two options can be unclear to many people.

Before we discuss the differences, let's briefly explain transshipment ports. These ports, also known as "transshipment hubs," are typically intermediate stops for large vessels traveling international mainline routes and feeder vessels shuttling between regional ports. At transshipment ports, operations such as loading, unloading, and resupplying take place. Transshipment can occur as a one-time arrangement by the shipping company or as a result of shipper-initiated re-routing, often for tax exemption purposes.

Benefits of transshipment include:

Duty-free advantages: Transshipment ports located in free trade zones offer tariff reductions or exemptions. For example, goods transshipped through Hong Kong, a free trade zone, can enjoy tax exemptions and even tax refund subsidies for most non-special-regulation goods.

Freight holding: Transshipment allows shipping companies to hold goods until trade issues are resolved before shipping them to the destination port. This process is more flexible than direct shipping, although it can be costly.

Transshipment port codes: When a vessel calls at multiple ports, different port codes are associated with its entry at each port. Incorrectly filled codes can result in containers being unable to enter the port, leading to costly re-routing and potential fines.

Now, let's define direct routes and transshipment:

Direct route: A vessel calling at multiple ports is still considered a direct route as long as containers are not unloaded and transferred to another vessel during the journey. Direct route vessels generally have more predictable schedules, and the actual arrival time at the destination port is usually close to the estimated time. Quotes for direct routes often include the expected transit time.

Transshipment: Containers in transshipment routes undergo vessel changeovers at intermediate ports. The transit time for containers requiring transshipment is typically less stable due to the efficiency of the transshipment port and subsequent large vessel schedules. Therefore, transshipment ports are usually specified in quotes.

Now, does a direct route guarantee faster transit than transshipment? In reality, a direct route is not necessarily faster than a transshipment route due to various factors influencing transportation speed.

Although direct routes theoretically save transshipment time, the actual transportation speed is affected by the following factors:

1.    Scheduling of flights and vessel services: Different airlines and shipping companies have varying schedules, which can prolong transportation time even for direct routes.

2.    Loading and unloading time: The speed of loading and unloading goods at origin and destination ports affects transportation speed. Some ports may have slower speeds due to equipment, labor, or other reasons, resulting in longer actual transit times for direct routes compared to expectations.

3.     Customs clearance speed: The speed of customs clearance can impact the overall transit time, even for direct routes. Strict customs inspections in the destination country can prolong the clearance process.

4.     Travel speed: Differences in travel speeds between direct routes and transshipment routes can affect transit time. Despite the shorter distance of direct routes, slower travel speeds can still result in longer actual transit times.

5.     Weather and sea conditions: Direct routes and transshipment routes may encounter different weather and sea conditions, affecting travel speed and safety. Severe weather and rough sea conditions can lead to longer actual transit times for direct routes compared to expectations.

In summary, accurately evaluating transportation time requires considering multiple factors. The most suitable transportation mode can be selected based on factors such as the goods' characteristics, transportation needs, and costs.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents