The container shortage in 2021 is causing intensification of competition for containers and vessel space. In addition, the logistics schedule for shipment is not stable at all.
In some cases, freight forwarders have managed to secure containers and make export arrangements, but the cargo usually does not arrive at the importing country easily.
One of the reason for the non-arrival of cargo is the problem of transship.
Usually, there are two types of ocean transportation, Direct Shipment and Transshipment.
Direct Shipment is when the cargo is loaded, at the exporting port to the importing port by the same ship.
On the other hand, Transshipment is one where the cargo loaded at the exporting port is reloaded onto a different ship at a different port on the way to the importing port. Depending on the ocean shipping route, there might not be Direct Shipment and transship is often necessary.
Direct Shipment is characterized by shorter transport times and higher ocean freight rates compared to Transshipment. Unless there is a problem with the ship carrying the cargo, the cargo will arrive when the ship arrives.
On the other hand, Transshipment takes longer time than Direct Shipment, which may be why ocean freight rates tend to be lower. However, if there is a problem such as congestion at the transit point, the cargo may not be able to reload on the scheduled ship and there is a possibility to wait for the next ship.
Waiting for transship can cause a significant delay in the delivery schedule. Moreover, there is other disadvantage such as possibility of damage due to the increased work involved in loading and unloading the container at the transit point.
One may think that it is more advantageous to take a Direct Shipment every time. However, it is not always possible to choose freely between Direct Shipment and Transshipment.
Hub Port is a port where many ships are transshipped for ocean container transport. It is designed to make it easier for ships to operate; such as exemption from taxes to facilitate transshipment and operation 24 hours a day, since it consolidates cargo as a base port.
Singapore, known as the global hub of the world, is the most famous for transship. It is estimated that Singapore is the world’s largest in handling volume of transship cargo.
In Asia, Hong Kong, Kaohsiung in Taiwan and Busan in South Korea are also commonly used for transship. For an example, if you export from Japan to Southeast Asian countries, it may go through Singapore. In addition, in case of cargo bound for regional ports in Japan, it is often shipped via Busan. Also, cargo from Thailand to Africa is often shipped via Singapore.
As for the current situation of transship, the connection of transship may not work due to the worsen congestion at the hub port. Nowadays, port operations at hub ports are sometimes restricted from port operations due to corona infection among workers.
There is also a shortage of truck drivers, which causes containers to be held up and sometimes cargo cannot be unloaded as scheduled even when the vessel arrives at the port.
Even though there is only one connecting ship per week, in case that there is confusion in loading and unloading of containers, they cannot be loaded on the scheduled connecting ship. When this happens, you have to wait until the next week or recently the week after that, for the next connecting vessel.
Even in Singapore, one of the world’s busiest hub ports, there is a heavy congestion and delays in vessel schedule, therefore, there was the news for omitting Singapore as a hub port recently but it is very unlikely to materialize as Singapore is one of the key ports connecting Southeast Asia with the rest of the world.
