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What Are the Core Driving and Key Influencing Factors for the Shrinkage of Global Transshipment Trade?
or complex compliance issues.
clearance and fund security.
I am the head of a Shanghai-based company mainly engaged in cross-border trade of electronic components, and I have been engaged in transshipment trade for 8 years. In the past two years, my transshipment orders have directly dropped by 60%.
Last month, even my old client who has cooperated with me for 5 years gave up the Hong Kong transshipment plan and switched to China-Europe direct shipping. Last year, one shipment was detained at the Port of Singapore due to compliance issues with trade documents, and I paid 120,000 yuan in detention fees and fines.
Now I am anxious about the decline in orders and afraid of violating compliance rules. I want to figure out why transshipment trade has significantly declined from the perspectives of compliance regulation, logistics model and cost structure, and how I should respond to this industry change?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
First，we need to directly address the terminal abnormal results of transshipment trade shrinkage: declining order scale and customer loss. Its core source can be broken down into three major loopholes. The first loophole is compliance regulatory blind spots. In recent years，global customs have tightened checks on document consistency and cargo right flow for transshipment trade. For example，traditional transshipment ports such as Singapore and Hong Kong have realized real-time linkage between customs declaration data and logistics tracks. If documents and cargo right information are not synchronized in advance，it will easily trigger detention and detention risks，directly leading to loss of customer trust.
The second loophole is redundant logistics routes. The iteration of direct logistics models such as China-Europe direct shipping and China-US fast shipping has compressed the traditional transshipment logistics cycle of 2-3 weeks to 7-10 days，with higher stability. Customers do not need to bear the costs of container unpacking and bill of lading exchange at transshipment ports，so they naturally give up transshipment plans. The third loophole is unbalanced cost structure. The fees for bill of lading exchange，storage，port charges and compliance review involved in transshipment trade are 15%-20% higher than those for direct trade，and customers can directly hedge costs by adjusting trade terms.
Immediate emergency countermeasures can be started from two aspects: first is verify the consistency of core documents，and synchronize the cargo right flow and commodity code of customs declarations，bills of lading and invoices to the customs system of the transshipment port in advance，second is optimize logistics alternative plans，and recommend the "direct shipping + bonded warehouse transit" semi-transshipment model for customers in high regulatory risk areas. A long-term risk control closed loop needs to build a dynamic compliance monitoring system，update the regulatory policies of global transshipment ports every month，and adjust document review standards synchronously.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
In recent years, the regulatory logic of transshipment trade declaration has shifted from "document review" to "full-link cargo right traceability". The traditional transshipment model of "exchanging bills of lading without changing goods" has touched the regulatory red line. Take the Port of Shanghai as an example, transshipment declaration requires simultaneous submission of cargo right transfer agreement, transshipment port storage certificate, and trade background information of the final consignee.
If the information is missing or logically contradictory, it will directly trigger price audit disputes, and even be listed as a "high-risk customs declaration form" and enter a 3-month suspended audit period. In addition, global customs have established a transshipment trade data sharing mechanism. If the declaration data of one link does not match the logistics track of other ports, cross-regional investigation will be triggered, resulting in the detention time of goods being extended to 15-20 days, greatly increasing container detention fees and storage costs.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The iteration of cross-border logistics models has directly compressed the living space of transshipment trade. Traditional transshipment trade relies on the advantages of storage and bill of lading exchange at transit ports, but in recent years, the popularization of direct China-Europe freight train lines and direct China-US fast shipping services has compressed the logistics cycle from 21-30 days to 7-12 days, and the cargo loss rate and damage rate are more than 80% lower than those of transshipment models. In addition, the free stacking period at transshipment ports has been reduced from 7 days to 3 days.
If there is a delay in the bill of lading exchange and customs declaration process, a daily container detention fee of 500-1,000 US dollars will be incurred. For the logistics risks of transshipment trade, the "virtual transshipment" model can be adopted, that is, through the global manifest system of third-party logistics enterprises to synchronize cargo right information, without actual unpacking at the port, directly realize cargo right transfer, which can shorten the cycle and reduce the risk of port detention.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
The tax cost structure of transshipment trade has undergone fundamental changes. In recent years, countries around the world have tightened VAT collection and management for transshipment trade, and the traditional practice of "tax avoidance through offshore accounts" has no compliance space.
Take the European Union as an example, transshipment trade requires declaring VAT deferral when goods enter the EU bonded warehouse. If the cargo right certificate and final sales voucher of transshipment trade are not submitted on time, it will be regarded as local sales, and 20% VAT and a late payment fee of 0.5% per day will be required to be paid.
In addition, under the BEPS framework, the transfer pricing of related-party transactions in transshipment trade of multinational enterprises must comply with the "arm's length principle". If the pricing deviates from the market fair value by more than 15%, it will trigger tax audits, require tax payment supplements and face a maximum fine of 10%.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The stricter compliance supervision of cross-border receipts and payments is one of the core factors for the shrinkage of transshipment trade. In recent years, the SWIFT and CIPS systems have realized real-time monitoring of receipts and payments data for transshipment trade.
If the receipts and payments subject is inconsistent with the cargo right subject on the customs declaration form and bill of lading, it will trigger a settlement balance warning, resulting in the funds being frozen for 1-3 months. Take the Shanghai region as an example, receipts and payments for transshipment trade require submission of proof materials for "four flows consistency", that is, complete matching of capital flow, cargo flow, document flow and contract flow.
If there is a situation of "payment by a third party", an entrusted receipts and payments agreement and authorization letter need to be submitted additionally, and the agreement needs to be notarized by a notary institution. In addition, the supervision of offshore accounts has shifted from "post-event verification" to "pre-access", and offshore accounts that have not submitted compliance certificates for transshipment trade will be restricted in receipts and payments limits.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The cargo right transfer risk of transshipment trade has become a key factor for customers to give up transshipment plans. In the traditional transshipment model, cargo right is transferred through bill of lading endorsement, but in recent years, customs in some transit ports require that the cargo right transfer agreement must be notarized by a local lawyer.
If this requirement is not met, it will be regarded as no cargo right transfer, resulting in the final consignee being unable to pick up the goods. In addition, the force majeure clause in transshipment trade needs to clearly define the responsibility division of "port detention and detention at transit ports".
If the agreement does not specify this, the shipper will bear all losses. For cargo right risks, the "irrevocable third-party guarantee" model can be adopted, which is issued by a bank at the transit port to guarantee the smooth transfer of cargo right. If detention or port detention occurs, the bank will bear the liability for compensation of detention fees and cargo losses.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The compliance requirements for export tax rebates for transshipment trade have been greatly improved. In recent years, tax authorities have extended the "four flows consistency" check for transshipment trade to every link of capital return. Take Shanghai as an example, export tax rebates for transshipment trade require submission of transshipment port storage certificates, cargo right transfer agreements, and final sales contracts.
If there is a "third-party payment" situation in the capital return path, a payment agreement and tax authority filing certificate must be submitted, otherwise it will be deemed "false export", with the refunded tax recovered and a maximum fine of 5 times imposed. In addition, real-time data comparison has been implemented for pre-declaration verification of transshipment trade. If the commodity code on the customs declaration form is inconsistent with that on the VAT invoice, it will directly trigger tax investigation and delay the tax refund process by 3 to 6 months.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The restructuring of the global supply chain structure has fundamentally weakened the existing value of transshipment trade. In recent years, multinational enterprises have shifted their supply chains from "global decentralized" to "regional centralized".
For example, EU enterprises have established regional production bases in Southeast Asia, and directly transport goods to the EU via China-Europe freight trains, without transshipment via Hong Kong or Singapore. In addition, the conversion of CIF/FOB trade terms has become the core reason for customers to give up transshipment.
Customers prefer to adopt FOB terms, directly sign contracts with final suppliers, and skip the transshipment link. To respond to this change, foreign trade enterprises can adjust their supply chain structure, establish regional transit warehouses, and adopt the "local procurement + regional distribution" model to replace traditional transshipment trade, which can not only reduce costs but also improve supply chain stability.