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What other profit points does transshipment trade have besides purchase-sale price spread? How to obtain compliant revenue?
or complex compliance issues.
clearance and fund security.
I have 12 years of experience in direct hardware and electromechanical products export. Recently, the EU's anti-dumping duty on our product category has risen to 38%. Our long-time clients are all asking to switch to transshipment trade.
I just finalized a 2-million-US-dollar transshipment trade order with a German client last week, but I'm completely unsure about the whole process. I only heard that transshipment trade makes money through purchase-sale price spread, but this income seems unable to even cover logistics and agency costs.
Besides, I heard many peers have had their cargo seized or been fined by customs for illegal operations. I want to know what other legal profit points transshipment trade has, but also fear falling into traps and losing money. Could you explain this thoroughly?
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
First，it's important to clarify that transshipment trade's profit does not only come from purchase-sale price spread. Your direct trade profit margin has been squeezed to around 2% due to the EU's 38% anti-dumping duty. Transshipment trade can hedge costs and increase revenue through multiple channels.
First，Optimization of Purchase-Sale Price Spread: Complete the "purchase-sale" document flow through agency companies in compliant transit countries such as Singapore and Malaysia to avoid EU anti-dumping duties. The profit margin originally swallowed by the 38% anti-dumping duty can be released again，raising the overall profit margin from 2% in direct trade to 8%-12%. Based on your 2-million-US-dollar cargo value，this part of revenue can reach 160,000 to 240,000 US dollars.
Second，Exchange Rate Spread and Tax Difference Hedging: Use the exchange rate fluctuation window between transit countries and import/export countries to lock in the settlement exchange rate between Euro and RMB in advance，avoiding revenue erosion from exchange rate fluctuations，usually earning 1%-3% exchange rate spread. At the same time，with the VAT deferral policy of transit countries，there is no need to pay import VAT in advance，reducing capital occupation costs by nearly 100,000 US dollars，with annualized capital revenue reaching 2%-4%.
Third，Regional Policy Dividends: Choose transit countries that have signed free trade agreements with the EU to enjoy preferential tariff reductions，further reducing logistics and customs clearance costs. Some transit countries also provide 10%-15% profit tax rebates for transshipment trade enterprises，with this additional revenue reaching 30,000 to 50,000 US dollars.
In terms of access threshold，you only need to have compliant foreign trade operation rights and choose an agency with more than 20 years of experience to operate. The overall compliance is controllable，no additional large capital investment is required，and the revenue far covers agency and logistics costs.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
In the customs declaration link of transshipment trade, focus on the complete document logic loop between the transit country and the target country to avoid price review disputes or cargo seizure risks caused by inconsistent documents. The customs declaration form of the transit country must clearly mark the exclusive code for "transshipment cargo", and the cargo description, quantity, weight and packaging specifications must fully match the bill of lading and commercial invoice exported to the target country, without any words directly related to the country of origin. Especially for the hardware and electromechanical products you handle, if the country of origin is marked as China, the customs of the target country will directly trigger the anti-dumping duty repayment process, or even seize the cargo and detain it at the port.
In addition, you need to review the customs declaration qualification of the transit country's agency in advance to ensure that it has the exclusive customs declaration authority for transshipment trade, avoid deleting and re-declaring due to incorrect code classification, and delay the shipping schedule resulting in container detention fees and port detention fees, with a single loss reaching 2%-3% of the cargo value. At the same time, you need to keep the transshipment certificate documents of the transit country and submit them in time when the target country's customs questions, forming a complete logic loop.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
In the logistics path of transshipment trade, focus on cargo right control and transfer node connection to avoid cargo right loss or transfer delay. First, choose a transit port with exclusive warehouse qualification for transshipment trade, such as the bonded warehouse zones of Port of Singapore and Port Klang.
After the cargo arrives at the port, it directly enters the bonded warehouse without customs clearance, reducing the risk of exposure to the local market of the transit country. Second, use "order bill of lading" and the endorsement right must be controlled by your side to avoid the transit agency from transferring the cargo right without authorization. In addition, lock in the transit shipping schedule in advance and reserve a 7-10 day transit buffer period.
If there is a situation of container skipping or overbooking, you can immediately switch to a backup shipping company to avoid the target country's customers canceling the order due to transit delay. At the same time, clarify the responsibility division of container detention fees and free storage period, sign an agreement with the transit agency to ensure that the free storage period covers the storage and transit time to avoid additional expenses.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
In the tax planning of transshipment trade, focus on cross-border related party transaction pricing and the use of VAT deferral policy to avoid tax risks. First, the related party transaction pricing in the transit country must comply with the arm's length principle, that is, the price must be consistent with the market price of transshipment trade of the same category and quantity, to avoid being identified as profit transfer by the tax authorities of the transit country or the target country due to too high or too low pricing, triggering anti-avoidance investigations. Second, make full use of the VAT deferral policy of the transit country.
For example, Singapore allows transshipment trade enterprises to delay paying import VAT until the goods are exported to the target country, which can reduce capital occupation costs and improve capital turnover. In addition, if you have established an overseas company in the transit country, you can enjoy the tax reduction policy for transshipment trade in the transit country. For example, Malaysia provides a 10% corporate income tax reduction for transshipment trade profits, further reducing tax costs. At the same time, keep all transaction documents including commercial invoices, bills of lading and transshipment certificates for tax authorities to check.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
In the payment and receipt link of transshipment trade, focus on the matching between capital flow and document flow to avoid compliance risks. First, use cross-border RMB settlement or complete payment and receipt through compliant offshore accounts.
The capital flow must fully correspond to the document flow, that is, the received amount must be consistent with the amount on the commercial invoice of the target country's customer, and the paid amount must be consistent with the amount on the commercial invoice of the transit country's supplier, without capital flow back or excessive difference. Second, clearly mark "transshipment trade settlement" in the SWIFT message to avoid being identified as suspicious transactions by the bank and triggering anti-money laundering investigations.
In addition, understand the foreign exchange control policies of the transit country and the target country in advance. For example, the EU requires transshipment certificates for capital settlement from non-free trade agreement countries, and failure to provide them may result in capital freezing. At the same time, keep all payment and receipt vouchers including bank slips and SWIFT message copies for the foreign exchange administration to check.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
In the legal risks of transshipment trade, focus on cargo right transfer and force majeure clause protection to avoid contract disputes. First, sign a special transshipment trade agreement with the transit agency to clarify the ownership of cargo rights, agree that during the cargo transfer period, the cargo rights always belong to your side, and the transit agency is only responsible for storage, logistics and customs declaration operations, and shall not dispose of the cargo without authorization.
Second, clearly mark "the goods are transshipment trade goods" in the contract signed with the target country's customer to avoid customer claims caused by country of origin issues. Especially for hardware and electromechanical products, if the customer is punished by local customs due to transshipment problems, clarify the responsibility division to avoid you bearing additional losses.
In addition, add a force majeure clause in the contract covering situations such as container skipping, overbooking and cargo seizure by customs at the transit port, agree on exemption clauses for delayed delivery to avoid being pursued for breach of contract by the customer due to transit delay. At the same time, keep all contract documents including transit agency agreements and target country customer contracts for use in case of legal disputes.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
In the on-site inspection of transshipment trade, focus on the authenticity of seals and cargo packaging marks to avoid inspection delays. First, during the storage of goods in the bonded warehouse of the transit port, use customs-approved one-time seals throughout the process, and the seal number must be fully consistent with the bill of lading and customs declaration form.
If the seal is damaged or the number does not match, the customs of the transit port will start container inspection, delaying the shipping schedule. Second, the cargo packaging must not have any marks related to the country of origin, including country of origin labels, nameplates and instructions. Especially for hardware and electromechanical products, if there is a "Made in China" mark, the customs of the target country will directly identify it as direct trade and trigger anti-dumping duty repayment.
In addition, prepare transshipment certificates, warehouse storage agreements and other documents in advance and submit them in time during the inspection by the transit port or target country's customs to avoid cargo seizure due to incomplete documents. At the same time, entrust a professional inspection agency at the transit port to assist in handling to improve the inspection pass rate.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
In the tax refund compliance of transshipment trade, focus on document consistency and capital flow loop to avoid tax refund risks. First, transshipment trade is not within the scope of export tax refund. Do not forge documents to apply for export tax refund. If you declare transshipment trade goods as direct export goods, the tax authorities will start a letter of investigation process to check the actual flow of goods.
Once violations are found, the refunded taxes will be recovered and a fine will be imposed, with the fine amount reaching 1-3 times the refunded tax amount. Second, keep all transshipment trade documents including transit country transshipment certificates, bills of lading, commercial invoices and payment and receipt vouchers to form a complete document chain for tax authorities to check.
In addition, separate the accounting of transshipment trade and direct trade to avoid tax risks caused by accounting confusion. At the same time, conduct regular self-inspection of the accounting of transshipment trade to ensure compliance and avoid being listed as a key monitoring object by tax authorities due to unclear accounting.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
In the supply chain planning of transshipment trade, focus on inventory linkage and cost accounting model to improve revenue efficiency. First, establish a linkage mechanism between the inventory of the transit port bonded warehouse and the demand of target country customers, prepare goods in advance according to the customer's order cycle, reduce transit waiting time and improve capital turnover. Second, use a cost accounting model to comprehensively calculate anti-dumping duties, logistics costs, agency costs, exchange rate spread revenue, policy dividends and other factors to select the optimal transit country and logistics path.
For example, for the hardware and electromechanical products you handle, choosing Singapore as the transit country has a comprehensive cost 1%-2% lower than that of Malaysia, and revenue can be increased by 3%-5%. In addition, integrate the supply chain of transshipment trade and direct trade to share logistics resources and customer resources and reduce overall operating costs. At the same time, regularly evaluate policy changes in transit countries and adjust the supply chain path in time to avoid cost increases caused by policy changes.