In what situations is transshipment trade necessary?

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I'm not very familiar with trade methods, and I'd like to ask everyone, in what situations is transshipment trade necessary? Is it because of tariffs, cargo transportation, or other aspects? I hope a professional can explain in detail, preferably with actual cases, so that I can better understand in which scenarios transshipment trade is a necessary choice. Thank you in advance.
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When facing high tariff barriers, transshipment trade often becomes a necessary choice. For example, if Country A imposes very high tariffs on a certain commodity from Country B, but has lower tariffs on similar commodities from Country C. If an enterprise in Country B wants to export the commodity to Country A, it can first transport the goods to Country C, undergo some simple processing or packaging, obtain a certificate of origin from Country C, and then export it to Country A, thereby reducing tariff costs.

Secondly, in the case of trade sanctions, if Country A imposes trade sanctions on Country B, prohibiting the import of goods from Country B, enterprises in Country B can use transshipment trade to resell goods to Country A through a third country.

In addition, some countries have trade quota restrictions. When the quota for domestic products is used up, transshipment trade can also be used to resell from a third country with sufficient quotas to meet market demand.

References: The Covert War of Transshipment Trade: Who Controls the Global Flow of Goods?

When cargo transportation requires transshipment in a third location to optimize the route, and involves the handling of trade procedures, transshipment trade may be adopted. For example, if goods are shipped from Asia to South America, transship through a European port, and simultaneously conduct trade-related operations at the transit point, it may constitute transshipment trade.

If the importing country has strict technical standards or certification requirements for specific products, and domestic products are difficult to meet the standards in a timely manner, transshipment trade can be used to carry out relevant processing in a third country that meets the standards before exporting. For example, for electronic products exported to Europe and America, they can first be sent to a qualified country for certification before transshipment.

When political relations between the home country and the destination country are tense and affect trade, but the market does not want to be lost, transshipment trade can be used as a roundabout strategy. For example, if trade is restricted due to political friction between two countries, enterprises can maintain business through transshipment via a third country.

If an enterprise wants to expand into international markets and leverage the trade advantages and market channels of a third country, it may also choose transshipment trade. For example, by using the mature sales network of the transshipment country, products can be introduced into more markets.

When domestic production is limited by resources, and a third country has resource advantages, processing and production can be carried out in the third country first, and then exported in the form of transshipment trade. For example, for some products that rely on special raw materials.

If the domestic trade policy has restrictions, while the third country's policy is more lenient, transshipment trade will be used to achieve trade objectives. For example, when there are differences in export tax rebate policies.

When enterprises want to hide the true origin of goods and prevent competitors from understanding their supply chain and other commercial information, transshipment trade can play a certain role in concealment.

When exchange rate fluctuations are significant, enterprises can use transshipment trade to conduct trade settlements in a third country with a favorable exchange rate, reducing exchange rate risks.

User-submitted questions and answers reflect personal opinions, not the official stance of this website.

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