Interested in the identification of transshipment trade and want to understand how it is defined in terms of trade process, cargo transportation, and documents. The best answer states that the identification of transshipment trade depends on the trade process, where goods are shipped from the country of production to a third country and then to the country of consumption. Cargo transportation generally does not involve substantial processing in the third country. Documents need to be consistent with the process and include relevant contracts, bills of lading, etc. Meeting these elements is generally sufficient for identification.
Is transshipment trade transit trade? A comprehensive explanation of their differences!
Resolved
I have been learning about international trade recently, and I am a bit confused about the concepts of transshipment trade and transit trade. I want to know if transshipment trade is transit trade? I feel like they both involve the flow of goods between different countries. Can you explain in detail what the relationship is between these two and what their differences are?
Trade Expert Insights Answers
Transshipment trade is not transit trade; they are different forms of trade in international trade.
Transshipment trade refers to the business of importing and exporting goods in international trade, which is not conducted directly between the producing country and the consuming country, but is conducted through a third country. This type of trade is transshipment trade for the transit country. For example, country A produces goods, and a merchant from country C buys goods from country A and then resells them to country B. The trade conducted by country C is transshipment trade.
Transit trade, on the other hand, refers to trade activities where goods from another country pass through the territory of a country without substantial processing or alteration of their state, and are transported to another country while basically maintaining their original form. For example, if goods are transported from country A to country B and pass through country C along the way, this is transit trade.
The main difference between the two is that in transshipment trade, merchants in the third country participate in the buying and selling of goods, and there are commercial transactions; whereas in transit trade, the country only provides the transportation channel, and there is no commercial transaction involved.
Transshipment trade and transit trade are not the same thing. Transshipment trade focuses on "reselling," involving the transfer of ownership of goods in the hands of a third-country merchant. Transit trade is merely the passage of goods through a country, with no buying or selling involved by that country; it is more about providing transportation convenience. For instance, Singapore often serves as a transshipment trade hub because of its trade facilitation, allowing merchants to resell goods for profit. Some landlocked countries, due to their geographical location, are often involved in transit trade.
Certainly not. Transshipment trade involves an intermediate profit-making link for middlemen, and goods may be stored or processed and packaged in the transit country. Transit trade, however, basically maintains the original state of the goods. For example, on maritime transport routes, if goods pass through the waters of a certain country, that country is involved in transit trade, with no buying or selling activities.
Transshipment trade is not transit trade. In transshipment trade, the third country participates in the trade for the purpose of profit. Transit trade is more about acting as a transportation channel due to geographical location. For example, if European goods are transported to East Asia and pass through Russia, Russia may be involved in transit trade.
Of course not. Transshipment trade involves traders operating in the middle, and goods may be repackaged or relabeled in the transit country. In transit trade, the goods are basically unchanged, only passing through. For example, when goods are transported via the China-Europe freight trains and pass through Kazakhstan, this is transit trade for Kazakhstan.
These two are different. In transshipment trade, the third country is a participant in the trade, earning money by buying and selling goods. In transit trade, the country merely provides space for the goods to pass through. For example, if goods from Southeast Asia are transported to Central Asia via Thailand, Thailand is involved in transit trade.
No. In transshipment trade, the ownership of the goods is transferred in the third country, and there are commercial activities. In transit trade, the goods are merely passing through, such as goods transported from South America to North America via Panama; Panama is involved in transit trade.
There is an essential difference between transshipment trade and transit trade. Transshipment trade involves reselling, while transit trade is simply the passage of goods and does not involve commercial buying or selling. For example, if goods from China's coastal cities are transported to Central Asia via Mongolia, Mongolia is involved in transit trade.
No. Transshipment trade involves reselling for profit by a third country, while transit trade is merely the passage of goods through a country. For example, if African goods are transported to Europe and pass through Mediterranean coastal countries, these countries are involved in transit trade.
Transshipment trade is not transit trade. In transshipment trade, there are traders who handle the buying and selling, while in transit trade, the country is merely a channel. For example, if Japanese goods are transported to India via South Korea, South Korea is involved in transit trade.