Even if you’re not in the shipping industry, there are certain trends in shipping that you might notice. Like, for example, why do most ships not go straight from point a to point b? Meaning, why do they not go straight to their destination when they travel? Most of the time, when you ship goods from one place to another, their travels usually have an intermediary point where they transfer from one vessel to another, or use it as a waypoint between the two destinations.
In ship crew training this practice has a name. Using an intermediary point between the origin and destination is also known as transshipment. Now why is this a common practice? Well, it’s simply business: the cost of transshipment is usually cheaper than if you took a direct route to your final destination.
Wait, how is this possible? How can indirect be cheaper than direct? You can blame that on a lot of different factors, actually. Let’s look at three things that make transshipment of bulk cargo much cheaper than shipping direct.
Why is transshipment cheaper?
1. You can think about consolidating items going to different destinations.
It’s the same idea as nonstop flights vs. flights with stopovers. The latter is cheaper because it’s more profitable to put together people who are going to the midway point and people going to the final destination.
2. Ships aren’t being fully utilised.
Related to the first point, transshipment may be faster but ships aren’t being utilised to their maximum capacity. This adds up to a lot of lost profit.
3. Less paperwork.
Some countries don’t even allow for direct shipment, or even impose fines. We can get around this with transshipment.
MSI Ship Management provides a variety of services from international ship management to crew management. Contact us to know more about our organisation to know more about what we can provide.
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