The Lion City is a significant centre of global trade. Keen to further solidify its position, the island nation of Singapore formally opened the first phase of its massive new Tuas Port in September last year (2022) after ten years of planning.
The PSA Singapore-operated port, which underwent three years of construction and involved around US$14 billion in investment, is located on the western seaboard. With the opening of this new port, the city state’s government aims to consolidate its container operations.
Singapore has plans for the new terminal to be one of the most technologically advanced and sustainable ports globally, hoping that Tuas will eventually become Asia’s leading transhipment hub.
The existing main port, the Port of Singapore, currently holds the world’s most significant transhipment port title and is the second-busiest port globally after Shanghai.
Approximately 80% of the containers that arrive in Singapore are transhipped to other ports. With supply chain disruption due to Chinese zero-COVID policies, this presents an opportunity for the country to further stake its claim in kinetic world commerce.
The new terminal indicates a broader trend by shipping hubs worldwide to consolidate their transhipping operations. As the world increases connectivity, transfering cargo between vessels at ports will only increase.
Another central maritime hub in Asia is in Busan, South Korea. The feeder vessel network connects the peninsula to Russia, China and Japanese ports. Its transhipping incentives also enable larger cargo volumes. For example, in 2021 Japanese container line ONE alone brought in more than 3m teu in gateway and transhipment volumes to Busan port.
Elsewhere, the picture shows nothing but long-term expansion. The Port of Hong Kong has a history of serving as a strategic benefit to British commercial interests in the region. However, the Port of Shanghai has emerged as a container transfer titan in tandem with the rapid economic expansion of mainland China in recent decades.
With the rise of e-commerce and digitalisation, more goods are being shipped worldwide with increased ease. This trend will likely only continue, and transhipment will play a critical role.
What is transhipment?
In the context of shipping, a transhipment refers to the process of transferring cargo or goods from one vessel to another during the course of its journey from the point of origin to its final destination. This can occur for various reasons, such as the need to change vessels due to capacity constraints, changes in the shipping route, or logistical reasons.
These kinds of cargo change operations are common when the distance between the point of origin and the final destination is extensive or where there are logistical challenges in delivering cargo directly.
In the case of international shipping, a cargo ship might have to stop at a port to transfer containers or goods to a smaller vessel that can navigate inland waterways to reach the final destination.
One of the primary reasons for organising container shipping in this way is the geographic constraints, whether it be due to port location, equipment or conditions. Many ports worldwide cannot accommodate large vessels due to their size or water depth. Transhipment allows cargo to be transported on larger vessels to intermediate ports, such as Singapore, where it can be moved to smaller ships that can navigate the shallower waters of the final destination.
This method of shipping can improve cost-effectiveness compared to direct shipping to the final destination. Larger vessels can be utilised to shift cargo between large ports, taking advantage of economies of scale to reduce costs.
It also allows for cargo distribution to smaller, less accessible ports, where direct shipping may not be an economical option. Meanwhile, companies can take advantage of reduced shipping costs and optimise the use of available vessels.
Political or economic sanctions can serve as a major hurdle to trade going in and out of a particular country or region. Transhipment means goods can be sent to intermediate ports, where they can be inspected and cleared for entry.
Furthermore, it can be a strategic tool in optimising global supply networks. Shipping companies can use container transfers at particular terminals to balance cargo flows between locations. This removes the need for empty return trips and maximises vessels and terminal facility use.
Risk management is another important consideration. For example, shifting containers between vessels at ports helps break up cargo movements across the world into smaller segments which lower cargo loss and theft risks.
Transhipment also provides opportunities for shipping companies to diversify their transport routes, reducing the impact of disruptions in any one particular region or port.
Tracking transhipments
If a company has sent a delivery through a worldwide network of ports, a significant consideration for them is keeping track of all their shipments and ensuring they reach their destination on time.
Moreover, paying attention to potential delays is essential for efficient trade throughout complicated logistics networks.
Delayed arrival of the vessel, ineffective port services and longer-than-planned unloading/loading activities, delays at the point of departure, and so on, are all factors that can contribute to delays. This is a challenge for the entire logistics industry.
Whatever the reason for hold-ups, they can still increase costs, affect customer satisfaction and overall can have a negative impact.
While unforeseen circumstances and human error are often inevitable, companies can update their customers on the status of their cargo to improve visibility. This helps build trust and transparency across supply chains and within customer/seller relations.
One method of tracking containers is to manually use a carrier’s website and enter the Bill of Lading (BoL) number. However, this can be time-consuming and doesn’t allow for all container information to be present on one website.
A more effective way would be to use a tool such as Visibility for Containers by MarineTraffic.
“With the MarineTraffic tool, you don’t have to log into multiple platforms to keep track of your container shipments. Using the Visibility for Containers Solution enables our customers to input their shipment information just once, after which they will receive updates every 30 minutes and are notified of any delays or other disruption to their shipment,” said Alex Charvalias, Head of Product at MarineTraffic.
6 future transhipment challenges
Transhipping is common practice and the tools to facilitate it are becoming more advanced, but there are still challenges. Addressing these will require careful planning and execution alongside using new technologies.
One of the challenges is reducing the amount of time it takes. Moving containers from one ship to another at the port can extend the entire shipping journey, as cargo must be loaded and unloaded at the port, slowing down the movement of cargo.
This can impact the overall delivery time of the cargo and may require additional coordination between shipping companies and logistics providers. Transhipment can also pose a security risk. Cargo is loaded and unloaded multiple times during transport making it vulnerable to damage or theft. In addition, the security measures at intermediate ports may be inconsistent with certain smaller terminals being less safe than major hubs.
Additional costs may also be added to the transport process, as it requires further cargo handling, loading and unloading. This can impact the overall cost-effectiveness of the process, particularly for smaller cargo or low-value goods.
Sufficient infrastructure, including terminal facilities and transport networks, needs to be in place at intermediate ports when moving cargo this way. In specific cases, the facilities at these ports may need to be improved to accommodate larger vessels or handle greater volumes of cargo, limiting the effectiveness of trashipment.
Given the broader international atmosphere of significant pressure for companies to decarbonise, environmental concerns are another factor now overhanging all areas of logistics. Using multiple vessels to transport cargo can increase the overall carbon footprint throughout the whole process.
Shipping companies typically have well-defined procedures and protocols in place to reduce costs. These can include using specialised equipment, trained personnel to handle the cargo and ensuring proper documentation and communication between all parties involved in transfers.
These accumulated factors mean that companies are progressively seeking ways to improve the transparency and effectiveness of their transhipments. With new ports such as Singapore making these operations a priority, and tools like MarineTraffic becoming increasingly popular, the solutions are quickly becoming a reality.