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What are the core reasons for Party A to choose transshipment trade instead of direct export?
or complex compliance issues.
clearance and fund security.
I am the head of a foreign trade company in Shanghai mainly engaged in the export of mid-to-high end electromechanical equipment, and I have been very worried recently: we have been shipping goods directly to the EU by sea before, but this year the EU has imposed an additional 35% anti-dumping duty on our product category, which has completely wiped out our original 12% profit, and old customers have canceled two million-level large orders due to the sharp rise in terminal costs. Last week, I heard from peers at an industry banquet that they reduced tariffs through transshipment trade, but I am afraid of stepping on compliance red lines and being fined.
I am also curious, apart from tax avoidance, are there other reasons for Party A to choose transshipment trade? For example, is it to avoid export quotas and solve the problem of origin identification? Now I want to use transshipment trade to save orders, but I am also afraid of falling into pitfalls, so I want to figure out what the real reasons are for Party A to carry out transshipment trade.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
First of all，analyze the core cost disadvantages of the direct export model: taking the EU anti-dumping duty you encountered as an example，the 35% additional tariff will directly devour the terminal profit，even lead to order loss. At the same time，if traditional direct export encounters quota restrictions，you need to purchase additional quota indicators，the cost increase can reach 15%-20%，and the long quota application cycle is easy to miss the order delivery period.
The core optimization paths of transshipment trade are divided into three categories: first，tariff hedging，through compliant container transfer in third countries (such as Malaysia，Singapore) and issuing local certificates of origin，you can avoid anti-dumping duties in the target country，and the cost per container can be reduced by 20%-30%，second，quota avoidance，some countries have restrictions on Chinese products but no quota requirements for third country products，after transshipment，you can directly use the trade access qualification of the third country，third，exchange spread arbitrage，through foreign exchange receipt and payment operations in third countries with large exchange rate fluctuations，you can use the exchange spread space of different currencies to obtain an additional 1%-3% of income.
In terms of access threshold，transshipment trade does not require additional qualifications，only need to ensure that third country suppliers can issue compliant certificates of origin，and the cargo right is controllable throughout the process，dynamic calculation of income ratio shows that when the tariff rate of the target country exceeds 10%，the comprehensive income of transshipment trade is 12%-18% higher than that of direct export，but if the tariff rate is lower than 5%，the logistics cost of transshipment trade may offset the income.
Finally，it should be noted that the core of transshipment trade is compliant operation，all documents need to maintain three flows consistency，to avoid being identified as origin fraud by the target country customs due to inconsistent documents，otherwise you will face the risk of cargo detention，fine and even being blacklisted.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
The core of customs declaration for transshipment trade lies in "dual declaration", that is, the entry declaration and exit declaration of the third country need to maintain consistent document logic. If you directly use the Chinese certificate of origin for transshipment declaration, the target country customs will track the actual origin through the cargo traceability code on the customs declaration form, triggering anti-dumping duty verification.
It should be noted that when declaring in a third country, you need to use the commercial invoice, packing list and certificate of origin issued by the local supplier, and the goods description, quantity and weight of all documents must fully match the documents finally exported to the target country, so as to avoid the situation of "inconsistent documents and goods". If you encounter traceability verification by the target country customs, you need to provide the container transfer record, storage certificate and logistics track of the third country to prove that the goods have indeed undergone substantive transshipment in the third country, rather than direct transit.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The core of transshipment trade logistics lies in cargo right control and path optimization. You need to choose a logistics service provider with its own warehouse in the third country to avoid the transfer of cargo right to a third party.
The container transfer link is the core node, you need to complete the operations of unpacking, container replacement and re-sealing in the bonded warehouse of the third country, and the seal number must be recorded in the logistics documents throughout the process to avoid cargo right disputes caused by inconsistent seals. At the same time, you need to plan the transit path in advance.
If the target country has doubts about the certificate of origin of a third country, you need to reserve a second transit country path. For example, when the EU is sensitive to Malaysian certificates of origin, you can switch to Sri Lanka. In addition, you need to reserve a 7-10 day transit buffer period to avoid port detention caused by port congestion in the third country, and the detention fee is usually 150-200 US dollars per container per day.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
The core of transshipment trade taxation lies in cross-border tax planning, you need to use the preferential tax policies of third countries to reduce the comprehensive tax burden. For example, Singapore exempts corporate income tax from the income of transshipment trade, only needs to pay 0.1%-0.5% of goods and services tax; Malaysia levies 10% corporate income tax on the profits of transshipment trade, which is much lower than the 25% tax rate in China. At the same time, you need to pay attention to the VAT deferral operation.
When transiting in a third country, you can apply for VAT deferral without paying import VAT in advance, and deduct it after the goods are exported to the target country, which can occupy the capital cycle for 30-60 days and improve the capital turnover rate. In addition, you need to avoid the problem of unreasonable pricing of cross-border related transactions, and the related transaction price must comply with the arm's length principle, otherwise you will face transfer pricing investigation by tax authorities.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
The core of payment and receipt compliance for transshipment trade lies in "three flows integration", that is, capital flow, cargo flow and document flow need to be fully matched. You need to use the offshore account of the third country for payment and receipt operations, and avoid directly using the domestic Chinese account to receive foreign exchange, otherwise it will be recognized as direct export and cannot enjoy the tax preferences of transshipment trade. At the same time, the transaction code of the SWIFT message needs to be filled in as "121000 Foreign exchange receipts and payments under transshipment trade".
If the transaction code is wrong, it will be included in the abnormal payment and receipt list by the foreign exchange bureau, affecting the subsequent foreign exchange settlement. In addition, you need to keep all payment and receipt vouchers, logistics documents and documents for at least 5 years for the compliance inspection of the foreign exchange bureau. If you cannot provide complete vouchers, you will face fines and the penalty of suspending payment and receipt permissions.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The legal core of transshipment trade lies in cargo right transfer and risk coverage. You need to sign a transshipment agency agreement with the third country supplier to clearly stipulate the ownership of the goods, the responsibility of container transfer and the compliance of the certificate of origin. The agreement should include the "origin fraud exemption clause".
If the certificate of origin issued by the third country supplier does not meet the requirements of the target country and leads to cargo detention, the supplier shall bear full compensation liability. At the same time, you need to sign a cargo right control agreement with the logistics service provider to clarify that the logistics service provider can only carry out container transfer and delivery operations according to Party A's instructions, and shall not dispose of the goods without authorization. In addition, you need to purchase cross-border freight insurance for the goods, and the insurance scope should include cargo damage, theft and robbery in the transit country and cargo detention risk in the target country, and the insurance rate is usually 0.2%-0.5% of the cargo value.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The core of on-site inspection for transshipment trade lies in the unpacking inspection in the transit country and the response to the traceability inspection in the target country. When transiting in a third country, if you encounter customs unpacking inspection, you need to prepare the commercial invoice, packing list and certificate of origin of the goods in advance, and the outer packaging of the goods needs to be replaced with the packaging of the third country supplier to avoid Chinese marks.
If the target country customs conducts traceability inspection, you need to provide the container transfer photos, storage records, logistics track and authenticity proof of the certificate of origin of the third country to prove that the goods have indeed undergone substantive transshipment in the third country. In addition, you need to pay attention to the authenticity of the seal. When transiting, you need to use a one-time seal recognized by the customs, and the seal number must be consistent in all logistics documents to avoid inspection risks caused by forged seals.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The core of export tax rebate for transshipment trade lies in distinguishing the boundary between direct export and transshipment trade. Transshipment trade cannot enjoy China's export tax rebate policy, and you need to avoid declaring transshipment trade as direct export to defraud tax rebate. If Party A carries out direct export and transshipment trade at the same time, it needs to separately calculate the income, cost and documents of the two types of business to avoid the mixing of documents.
At the same time, you need to keep all documents of transshipment trade, including the third country's certificate of origin, container transfer records, payment and receipt vouchers and logistics documents, for the tax rebate audit of the tax authorities. If the tax authorities question the authenticity of transshipment trade, you need to provide a complete document chain to prove that the goods have not entered the Chinese territory, otherwise it will be recognized as defrauding export tax rebate, and you will face fines and criminal liability.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
The core of supply chain planning for transshipment trade lies in full-chain cost actuarial calculation and inventory linkage. You need to establish a cost model for transshipment trade, including the logistics cost, certificate of origin cost, tax cost and capital cost of the third country, and dynamically compare it with the cost of direct export.
When the comprehensive cost of transshipment trade is more than 10% lower than that of direct export, you can start the transshipment trade model. At the same time, you need to establish an inventory linkage mechanism with third country suppliers, and reserve some commonly used goods in third countries in advance to shorten the transit cycle and improve order delivery efficiency.
In addition, you need to optimize the supply chain structure, incorporate transshipment trade into the normalized business model, avoid the increase of logistics costs caused by temporary transshipment, and establish a risk early warning mechanism for transit countries. When the political and economic risks of the third country rise, switch the transit path in time.