Why is transhipment an integral part of route planning in international shipping?

Global trade acts as the pulse of the worldwide economy, with its importance emphasized by the extensive scale of the operations it encompasses. With over 4.3 million port calls in 2021, and the global container throughput surpassing 857 million TEUs, it is no surprise that this sector is relentlessly striving towards refining the global movement of goods. 

A critical element that has significantly contributed to the efficiency of this optimization process is the concept of transhipment. 

This blog examines the reasons for transhipments and how they have become an integral part of route planning in shipments.

What is Transhipment?

Transhipment, at its core, is the process of offloading a shipment from one carrier and loading it onto another at a designated transhipment hub or port. All modes of transport — sea, air, rail, and road — leverage transhipment to consolidate shipments headed towards similar destinations. This system facilitates the creation of more direct and swifter routes for transporting goods.

Without transhipment, the sheer magnitude of the logistics involved in international shipping would be overwhelming, as a direct route to every destination is impractical and economically unfeasible.

The integration of transhipment in global shipping route planning has revolutionized the industry in several ways:

1. The industry's ever-growing need for capacity optimization is addressed by transhipment as the aim of carriers in general is to maximize the number of containers transported in each voyage to each port. In the case of sea freight, shipping containers to all ports would necessitate many smaller vessels, which is less efficient in terms of fuel consumption and overall transport cost per TEU. By using larger vessels and transhipping at hub ports, ocean carriers can optimize capacity, reduce costs, and improve the overall efficiency of their operations. 

2. Transhipment enables the implementation of a hub-and-spoke network, which is essentially smaller feeder vessels or smaller aircraft transporting goods from various ports (spoke) to a central hub (hub) where they are transhipped onto larger vessels/aircraft destined for other hub or spoke ports. The hub and spoke concept is instrumental in streamlining logistics and maximizing efficiency.

3. Transhipment significantly bolsters service frequency and often reduces transit times. By consolidating shipments destined for similar locations, carriers can provide more frequent services to popular routes. Coupled with the utilization of more direct routes, this often culminates in shorter transit times, thus benefiting customers.

4. Transhipment contributes to the enhancement of global connectivity, especially for countries with less-developed ports and airports as transhipment provides these countries with access to markets. With the ability to consolidate cargo from minor ports and tranship them at major hubs, a greater number of regions can be effectively and economically connected to the global market.

Transhipment and Route Planning

Transhipment, however, introduces an element of complexity to shipment route planning. Ensuring the seamless transition of shipments from one vessel/aircraft to another, coordinating between different vessels/aircraft and ports/airports, and managing the added risk of potential delays or mishaps demand sophisticated planning and expertise.

However, advancements in technology and comprehensive route planning software like Fluent Cargo are enabling smoother and more reliable coordination within different elements of the supply chain. This in turn reduces potential risks and makes the route planning process more dependable.

As the world grows increasingly interconnected, the significance of transhipment continues to rise. Effective route planning helps not only in the transhipment of containers, but also with planning for goods in transit, as with effective route planning,

landlocked countries can identify nearby transhipment hubs and have access to worldwide trade lanes.

This can bring international trade within reach for countries that would otherwise face significant barriers to entry.

Transhipment Shaping Future Trade Patterns

Transhipment plays a pivotal role in shaping future trade patterns. Transhipment hubs, due to their strategic position, are often regarded as the nerve centres of the global trade system, where alterations in trade flows can be quickly recognized and accommodated.

Transhipment ports, through their connections, are not just responding to changes in trade routes, but actively shaping them. They play a significant role in directing trade

flows by providing the necessary infrastructure and connections. For instance, a new transhipment hub established at a strategic location can create new routes and thereby alter the pattern of trade flows.

As an example, countries such as China are investing heavily in their transhipment capabilities and connectivity such as the Belt and Road Initiative to enhance their competitive positioning in international trade. 

Conclusion

The scale of international shipping is massive, and as it continues to grow, the complexity of managing such vast operations necessitates strategies that optimize efficiency, reduce costs, and improve service delivery.

Transhipment has proven to be one such strategy, forming an indispensable part of route planning in international shipping. And as technology continues to evolve and drive further improvements in the industry, the importance of transhipment in international shipping is only set to increase.

The overwhelming consensus within the industry is that the benefits of transhipment far outweigh the complexities introduced. By enabling capacity optimization, facilitating the implementation of hub-and-spoke networks, and increasing service frequency, transhipment has proven to be an integral part of route planning in international shipping.

As technology continues to advance and support the industry, especially in route planning, the role of transhipment is set to evolve and adapt to cater to the evolving needs of global trade.