I don't know much about transshipment trade. I'd like to know what kind of actions belong to transshipment trade and specific examples, and also understand the difference from general trade. The best answer explains that transshipment trade involves the re-export of imported and exported goods through a third country, such as Chinese apparel being re-exported to the United States via Singapore. Transshipment trade involves three parties and differs from direct export in general trade, with a more complex process.
Why Does Transshipment Trade Occur? Come and Find Out!
Resolved
Recently, while researching knowledge related to international trade, I haven't fully understood the reasons behind transshipment trade. Why aren't goods shipped directly from the producing country to the consuming country, but instead go through a third country? What are the driving factors behind the occurrence of transshipment trade? I hope someone can explain the reasons for transshipment trade in an easy-to-understand way.
Trade Expert Insights Answers
The main reasons for the occurrence of transshipment trade are as follows. Firstly, geographical location plays a role. Some countries or regions have superior geographical locations, such as Singapore and Hong Kong, which are situated on major transportation routes, facilitating cargo distribution and transshipment.
Secondly, the existence of trade barriers is an important factor. When high tariffs, quota restrictions, and other trade barriers exist between the exporting and importing countries, transshipment trade can be used to take advantage of lower trade barriers in a third country, thereby reducing trade costs. For example, if Country A imposes high tariffs on a certain product from Country B, the product from Country B can first be shipped to Country C, which has more relaxed trade policies, and then from Country C to Country A.
Furthermore, differences in tax policies exist. Some countries and regions implement preferential tax policies to attract trade activities, and transshipment trade can utilize these policies to save on tax expenses. Additionally, there are advantages in information and resources. Some regions have strong capabilities in information gathering and resource integration, which can better facilitate transshipment trade.
Transshipment trade sometimes occurs due to the inherent characteristics of the product itself. For perishable products, intermediate locations may be needed for processing or treatment to maintain quality, thus promoting transshipment trade. For instance, fresh fruits exported from their origin might be shipped to an intermediate point for preservation treatment before onward transportation.
It may also be due to trade channel reasons. Some companies have mature and stable trade channels and customer resources in specific regions. Even if the goods are not produced or consumed in these regions, they may choose transshipment trade to leverage these channel resources.
Diversified market demand is also a reason. Different countries have different requirements for product specifications, packaging, etc. Transshipment trade can allow for adjustments to the goods at the transshipment point to meet the demands of different markets.
The occurrence of transshipment trade is related to logistics costs. Sometimes, direct transportation routes have high logistics costs, while transshipment through a third country can optimize the transportation route and reduce logistics expenses.
Political factors can also have an impact. When political relations between two countries are unstable and trade is affected, transshipment trade through a third country is used to ensure trade activities continue.
Convenience in financial settlement can also lead to transshipment trade. Some regions have well-developed financial services and convenient settlement, which is conducive to the flow of funds in transshipment trade.
Specific industrial advantages also serve as driving factors. For example, if a region has advantages in processing or testing certain types of products, goods transiting through this region can leverage these advantages to enhance product value.
The occurrence of transshipment trade may be due to corporate operating strategies. Companies choose to transship through a third country to diversify trade risks and avoid over-reliance on a single market.