What is the difference between Transhipment and Cargo in Transit..??
This article is based on a question from a user Krishna..
What is Transhipment..?? – Transhipment is the act of off-loading a container from one ship (generally at a hub port) and loading it onto another ship to be further carried to the final port of discharge..
How is this different from Cargo in Transit..??
A cargo that is moved from an origin point across international borders to another country over land is termed as “Cargo in Transit”..
Let me explain further..
There are several countries and commercial centers around the world that don’t have a seaport and these countries have to use the seaports of other countries in order to import or export their cargo..
Some examples of such countries would be
- Ethiopia which uses the port of Djibouti in Djibouti as their gateway port
- Uganda which uses the port of Mombasa in Kenya as their gateway port
- Moldova which uses the port of Constanta in Romania as their gateway port
Cargo in Transit move could be as below :
- Cargo from Country A is moved to destination Country D via Country B (which could be a sea port) and Country C (another inland country) or
- Cargo from Country A is moved to destination Country D overland, via countries B and C where Countries A, B, C and D are all within a union of countries like the EU
Bills of Lading and Manifest for cargoes bound for such inland country destinations, must carry the clause Cargo in transit to “name of country” .. This clause tells the gateway/transit port/country that the cargo is not meant for consumption in their country and is meant for the manifested inland country and by virtue of this clause, the cargo maybe allowed to transit international borders under customs control..
If this clause is not included in the bill of lading and manifest, the movement across the international border will not be allowed and the recipient might need to customs clear the goods at the gateway port which might not be an ideal situation for the recipient..
In some cases, shipping lines or government regulations might dictate/insist that the clause reads as “Cargo in transit to “name of country or final destination” on client care, risk and cost“..
Cargoes in transit may be moved via any mode of transportation depending on the infrastructure available..
The documentation and customs clearance processes between the countries depend on their trade and other co-operation agreements.. Unions and Communities such as EU and SADC have agreements for cargoes moving in transit within/via their territories..
To summarize :
*** Transhipment is the act of off-loading a container from one ship (generally at a hub port) and loading it onto another ship to be further carried to the final port of discharge.. Cargoes that have been off-loaded at a port for transhipment are NOT allowed to exit the port by land or rail across international borders to a land locked country unless they are declared as Cargo in Transit..
*** Cargo in Transit is the movement of cargo that is
- discharged at a gateway seaport or
- originating from a country within a union
across international borders to another country where the final destination is (generally) a landlocked country..
Would love to hear your experiences with In Transit cargo especially within the African Union countries and within the European Union..?? Do you find the documentation and movement quite cumbersome..??
I have a simple question. I was wondering how would one categorize the process whereby crude oil procured from the Gulf states would come to Pakistan get refined and then transported to China would this be considered transshipment or transit?
Hi Ayesha, it would be classified as a regular import and export or import and re-export depending on the customs/trade regulations in Pakistan.. Transhipment applies ONLY to cargo that does NOT go out of the discharge port and Transit applies to cargo that moves in bond to the final destination where it will be termed as an import.. In your case you are talking about the characteristics of a cargo being changed in which case it will be import..
If we have transshipment involved ( changing vessels in Turkey) – should we pay VAT for transshipment services?
Hi Zuzana, each country may have different regulations.. But as far as I know, most of the countries do not charge VAT for freight related charges and since T/S costs would be part of the freight cost on a through bill of lading, I don’t think this will be applicable..
myself i was confused about the different between the ship and vessel, i like it
A big tanks for writing this explicitly. And I’m so satisfied with thisome!
could we put statement of CARGO IN TRANSIT without put the destination of that transit
Hi can the same vessel dock at port A port Rashid uae and then proceed to port B bandar imam Khomeini Iran final destination
Of course it can..
It was an interesting sharing. If we want to ship the good from Port Klang Malaysia to Blantyre Malawi via Durban by LCL shipment, does our goods subject to custom clearance in Durban which is consider as a transit port? What is the risk that we have to take note in this case?
Hope to hear from you soon.
What is process import documention start to end for nahava sheva
Dear Mr Hariesh,
I have a case where port of discharge (Callao – Peru) and place of delivery (Matarani – Peru) in the BL are in the same country and are both Maritime ports. INCO term for the sales contract is CIF Matarani. In such a case… where do we need to clear goods? and who is responsible of clearance? Can we indicate in transit when both destinations are in the same country?
Appreciate your feedback.
I am not sure what the rules are in Peru, but in a lot of the countries customs clearance must be done at the first port of entry which in your case is Peru.. But in any case, the sellers obligation is till cargo reaches the CIF named port of destination, in this case Matarani..
But under CIF, it is the responsibility of the buyer to obtain, at his own risk and expense, any import licence or other official authorization and carry out all customs formalities for the import of the goods and pay all duties, taxes and the costs of carrying out customs formalities and for their transport through any country unless included within the cost of the contract of carriage..
Trust this assists..
Dear Mr Hariesh
after unpacking the cntr , what is the place should client to back the empty cntr in it ? if the shipment is transit or cargo in transit ?
Hi Hassan, neither.. The empty container has to be returned to the shipping line’s nominated depot which they will advise at the time of giving the release..
what are the risks for a carrier who issues the bill of lading and allows the remarks “cargo in transit ” when the governing charter party is from loadport A to discharge port B. Can the carrier be held responsible for any “transit” ?
Hello Liesbeth, CP is normally used in bulk vsls and to some extent in break bulk shipments.. Carriers for both of these modes only accept port to port shipments as far as I have seen.. In transit is normally used by container shipping lines and in container shipping CP is not used.. There is no legal basis to hold carrier responsible for cargo remarked in transit in the body of the bill.. Carrier will be liable only if Final Destination in bill of lading is shown as a place different from the POD..
This article is very helpful. Thanks for sharing.
Glad to be of help Mustafa..
Please advise if a shipment is going to Iraq via Bandar Abbas, Iran, the consignee on the OBL should be of Iraq or Iran. As shipping line has received booking upto Bandar Abbas, FPOD on BL will be Bandar Abbas with a transit clause i.e. “Cargo in transit to Iraq on consignee’s own cost & risk. Carrier’s responsibility ceases at Bandar Abbas”.
The FPOD on shill bill filed with Customs shows as Bandar Abbas, Iran & OBL is also shows the same FPOD, is it right to show the consignee of another country ?
Hello Suresh, consignee can be in any country as long as the transit country’s customs allows it.. Some countries do not allow transit further if the consignee details are not in the country of destination..
Hope you’re doing good; You know, your blog is my first reference when I want to know something in international logistics! I love it!
This is my first time to have “cargo in transit to..” case; so you explained well; I’m in the begining of a new transaction with that; so I’ll tell you what I have on the BL As Soon As I get it;
One question: on the BL, Where shall “cargo in transit to ..” be mentioned? on the description; Port of discharged..?
Hi Meryam, it is normally mentioned in the body of the bill below cargo description..
I find your blog very informative. Thanks for sharing these useful website with all of us.
(I still find this blog very interesting & readers’ contributions are always a pleasure to read … thanks a lot to all)
A warning though : co-loaders (Shpco, Vanguard, Eculine …) may use the word “transshipment” when they unload the cargo out of a container, then re-load it into another container.
It is then different from a “regular transshipment” as defined by the article, and I 100 % agree with the article’s definition.
it is therefore useful to have co-loaders clarify what the voyage of the cargo will be :
– direct sailing : 1 container & 1 vessel
– regular transhipment(s) : 1 container, more than 1 vessel
– co-loader’s transshipment : more than 1 container, and therefore more than 1 vessel
As a FF, this is a piece of information that we owe to our clients and that co-loaders usually forget to mention : this is usually because their operations departements (that book containers & voyages) are generally totally disconnected from their booking departments (that register clients’ bookings & follow deliveries & clearance : basically they fill in containers).
On the other hand, I am currently starting to ship containerized cargo to Bolivia via Arica in Chile : any feed-back re. this type of shipment will be welcome.
Many thanks to all. E.
I just read the article about the difference between Transhipment and Cargo in transit. I understand the difference between the two but what I would like to know is first; to what extent will customs concern itself with transhipment cargo since the cargo isn’t really coming into the country but will however be within an “entry point” into the country and secondly; If cargo is indicated to be “cargo in transit” what measures will customs have in place to ensure that the cargo does eventually leave the country at another exit point?
Hi Mthokozisi, very good questions..
1) When transhipment cargo comes into a country it is declared to the port as transhipment and it is stacked separately from the local import cargo.. Since it has been tagged as transhipment in the port system, the port will not allow it to move out of the port area/control.. So in that sense, I would say that customs does not involve themselves to a great extent..
2) When the cargo indicated as “In Transit” is landed, in the case of SA, for example, a RIT (Removal in Transit) document.. Once this document is filed goods may be moved in transit, with the temporary suspension of duties or VAT.. In these cases the entity that is filing the RIT (usually the bond holder) is required to acquit their liability by providing proof to customs that the goods have reached their intended destination or has exited the borders of South Africa..
I am pretty sure that most countries have similar arrangements for In Transit cargoes..
If anyone has any other observations, please feel free to share..
Really helpful article…Thanks for share!
Hi Hariesh, we export cargo on a regular basis to Uganda, for which the port of discharge is Mombasa, Kenya. But I checked on the BL, there is no usage of the term “Cargo in Transit”. The place of final destination is Kenya. I suppose the customer is clearing the goods at Mombasa itself.
I guess it is not mandatory to mention this clause and it depends on what the customer wants.
Hello Rahul, thanks for sharing.. Yes if the In Transit clause is not mentioned, then it would have to be cleared at the discharge port and then moved inland..
Yes it is cumbersome in Africa, especially port clearances…… we also transit cargo to afghanistan via pakistan…….especially when we make a bl to order of a bank!
Thank you Ramesh, for the benefit of all, can you elaborate a bit more on the challenges in Africa and for Afghanistan via Pakistan..
Just wanted to add, for Pakistan to Afghanistan Trade, After RIT or PGD (Pakistan Goods Declaration) clearance, the Pakistan Customs affixed special seals to the containers (trucks to be placed by only Customs Bonded Carriers having their fleet owned or not owned must registered with Customs) and at the time of Border Crossing Customs Station at Border (Exit point) recheck those seals and cut them when they cross the chains. Interesting point is that when a truck leaves from port having customs seals affixed it is updated in customs system available at gates and if a truck fails to cross border with seal intact it can never take a customs load again and that Bonded Carrier has to face a show cause for one of their truck not crossed within stipulated time frame.
Hi Sajid, thank you for your contribution, you may find this to be a peculiar question but how fluid is the system in Pakistan, and what types of hurdles have been encountered with this system?
I don’t see any hurdles or interventions as Bonded Carriers (Transporters) have a big security money deposited with Customs and in case of breach of laws customs forfeits the amounts of possible duty losses to government with all the possible fines and legal actions thereof. So to me in the good spirit of this procedure doesn’t seems any flaws.