Transshipments are the key to understanding global logistics. When it comes to international commerce, few operations are as relevant to the overall structure of trade and consequential to the eventual arrival of cargo. However, despite their importance, few has been written about how they impact the structure of supply chains and why they are relevant to companies even if they aren’t currently considering them.

This article is meant to provide an initial guide to transshipments: what they are and how they operate. In it, we cover how they are directly tied to disruptions in global commerce

What Is Transshipment?

Simply put, it is an operation where cargo is moved from one vehicle to another. This is most common in ocean trade, where a single vessel makes a great number of stops before reaching its end destination. These stops don’t necessarily imply that the full cargo of a vessel is emptied at a port to be moved to another vessel. In fact, it is often just a  fraction of cargo that is removed from the vessel to either be picked up at port, or moved to a different form of transportation—be it another container ship, a train or a truck. At the same time, a vessel might receive additional cargo at that same port, replenishing the cargo that was removed.

Main Purpose of Transshipment

For companies shipping goods, a transshipment often happens when there is no direct connection between two ports. In such cases, a company might have to send their cargo through two or more shipping lines, making transshipments whenever necessary. 

This, in essence, is what makes ocean shipping so complex. Vessels are constantly loading and offloading cargo at different ports. Some variables that might seem negligible like the location of a shipping container in a boat, can actually result in great impacts when it comes to offloading cargo. Containers closest to the top can be removed more easily and should prioritize cargo for neighboring ports, while those at the bottom, will require the movement of dozens of additional containers.

Transshipments Main Challenges

Yet what’s most important is not that transshipments themselves are complex. Rather, their true relevance comes from the effects of their complexities. Since transshipment operations can take large amounts of time, they can also result in delays at a given port. These delays, in turn, increase the wait time for other vessels trying to enter the port in question, creating great congestions in the world of ocean shipping. If, on top of that, we add external disruptions such as weather events, malfunctions in technology, or geopolitical conflict (from protests to tariffs), transshipment ports soon become a problem for all ports that follow in a route.

The main transshipment challenges in a summary are:

• Port congestion

• Weather and natural disasters

• Financial challenges

• Compliance

Perhaps the points above are better explained through data. Currently, the UN estimates there are some 939 container ports in the world. However, direct routes between ports are extremely rare. If there were direct routes between all ports in the world, that would result in 440,391 routes. Yet current estimates suggest there are only 12,748 direct routes between ports—or 2.9% of what is possible. That means that, by and large, the bulk of global commerce happens through transshipment ports. In the worst cases, a vessel might need up to six transshipments and 14 port stops to reach its end destination.

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So, in simple terms, ships need to make stops. Sometimes, it is by design, to allow them to carry new cargo and transship other containers. In other instances, it could be a technical stop to refuel or change crews. Regardless, stops will happen in over 97% of routes and, when they do, the wait times in any port are likely to impact the overall shipping time for a product. It’s really a waterfall effect, where delays in one stop along a route will have an impact further down the line.

Transshipments Ports

We’ve written quite extensively about port congestion and how it impacts shipping. Now, we want to turn our attention to another useful metric: the availability of transshipment options. More specifically, determining which are the best ports for transshipments based on the number of efficient routes they hold. For logistics operators, this could help them plan ahead of their routes to ensure they are taking the optimal path before considering congestion.

When discussing estimates like these, the UN has a useful index called the Port Liner Shipping Connectivity Index (PLSCI). In essence looks at all container ports in the world and assesses them based on a number of key factors, from the number of containers it handles, the total number of boat calls at port, and, crucially, the number of connections it has to other ports.

In the figure below, we plotted the PLSCI for the most recent period available: Q3 2023. As we can see, connectivity seems to peak in East Asia and Europe, suggesting ports in both regions have the most number of connections to other ports in the world. There are similarly high scores in the Persian Gulf, and the U.S. East Coast. This generally aligns with our past research on choke points to global trade, many of which also concentrated in East Asia and Europe. This suggests an inherent trade off. Ports with more connectivity will have more traffic and, likely, be subject to more disruptions. But, at the same time, they will offer more alternatives to reach a desired port. Logistics operators would bear this in mind as they plan their ideal routes.

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Interestingly, the same data from the U.N. suggests that connectivity is steadily increasing. In the figure below we plotted the average score for connectivity across all ports per quarter since Q1 2006. In a period shorter than a decade, the average connectivity score at a port jumped from 89.26 points to 101.4 points. This is a small increase when considering the most connected port in the world. Shanghai, has a score of 2,258.52 points. Nevertheless, it is a positive signal of progress.

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Looking at the data with a regional perspective, we wanted to look at the average scores of North America and how they compared with the rest of the world. In the graph below, we plot the average score across all ports in a country or region with the latest available data point from the UN.

• The US is the most connected country in the region, with an average score of 126.56 points—and also the only that surpasses the average score for the rest of the world of 101.09.

• Mexico, interestingly, is the second most connected country in North America, with a score of 94.11 which surpasses the average for the rest of Latin America of 92.27.

• Canada, meanwhile, came in last in North America with a score of 74.81—about 20 points below that of Mexico and 50 below the US.

Choosing between each country could have considerable implications on the number of routes available to use.

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How to Track Transshipment?

All this research shows that transshipments are an essential metric to trade. Crucially, they allow businesses to see where their shipments will have the most routes to arrive at their final destination, instead of being stuck in a low connectivity port waiting days for a containership to arrive.

We believe companies should have the ability to leverage data as this to make the best decisions when it comes to supply chain planning. If you are interested in seeing how our tools can help optimize your logistics by taking into account transshipment disruptions, make sure to schedule a demo below: