What is transshipment? Transshipment is the transfer of goods through an intermediary country before reaching their final destination. While common in global trade, it carries serious risks—especially with the US imposing a 40% tax on illegally transshipped goods.
This blog explains the risks of transshipment and why direct shipping with EasyParcel is a safer, more compliant alternative for your business.
Table of Contents
What Is Transshipment?
Transshipment refers to the process of transferring goods from one mode of transport to another in an intermediary country before they reach their final destination.
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Aspect
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Explanation
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Common reasons
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Consolidating cargo, saving costs, or when no direct route exists
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Example
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Goods manufactured in US, shipped to Japan, then forwarded to China
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Key issue
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Determining the true Country of Origin (CoO) becomes complex
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While transshipment is a legitimate shipping practice, it becomes problematic when used to disguise a product’s true origin.
Why Transshipment Matters for US-bound Shipments
The United States has tightened its scrutiny of transshipments, particularly those that may be used to evade tariffs. The US now imposes an additional 40% tax on imported goods found to be illegally transshipped, on top of already existing duties.
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Risk
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Consequence
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Higher tariffs
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40% penalty plus regular duties
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Customs delays
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Increased inspections and holds
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Legal consequences
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Fines, seizure of goods
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Reputational damage
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Loss of customer trust
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The challenge lies in determining a product’s true Country of Origin (CoO) when it passes through multiple countries before reaching the US.
How Country of Origin (CoO) Is Determined
The US employs two methods to determine a product’s CoO:
1. The Wholly Obtained Principle
Port authorities first check whether every component, assembly, and packing was completed in a single country. If yes, that country becomes the product’s CoO.
2. The ‘Substantial Transformation’ Test
If the product does not originate from one single country, authorities apply the substantial transformation test.
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Substantial Transformation (Changes CoO)
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NOT Substantial Transformation (Does NOT Change CoO)
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Change in tariff classification
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Simple assembly or mixing
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Manufacturing with above-minimum value-added content
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Repackaging
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Processing that creates a radically new product
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Affixing marks, labels, or signs
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Illegal Transshipment: What You Need to Know
An illegal transshipment occurs when a shipment’s Country of Origin is falsified to obtain lower tariff treatment.
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How It Works
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Why It's Illegal
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Goods are rerouted through an intermediary country
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Evades established tariffs
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CoO is relabelled despite no substantial transformation
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Undermines international trade rules
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False documentation is submitted
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Creates unfair trade practices
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How Illegal Transshipments Are Detected
Port authorities can identify illegal transshipments through:
- Incomplete or inconsistent documentation
- Analysis of vessel movements
- On-the-ground inspections
Penalties for Illegal Transshipment
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Penalty
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Impact
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40% additional tax
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On top of existing duties
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Seizure of goods
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Confiscation by customs
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Legal action
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Fines and potential criminal charges
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Banned from importing
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Loss of ability to ship to the US
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Reputational damage
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Difficulty finding shipping partners
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Transshipment vs Direct Shipping: A Comparison
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Factor
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Transshipment
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Direct Shipping (EasyParcel)
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|---|---|---|
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Cost
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Potentially lower but risky
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Transparent, predictable
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Risk of penalties
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❌ High (40% tax if caught)
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✅ Low
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Customs compliance
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Complex, case-by-case
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Simplified
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Delivery time
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Unpredictable
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Reliable
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Documentation
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Extensive, complex
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Streamlined
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Tracking visibility
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Limited across multiple legs
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End-to-end tracking
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Best for
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Large-scale freight
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E-commerce, small parcels
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Send Large Volumes Overseas Without the Hassle
Why EasyParcel Is the Safer Choice
Direct shipping routes
No intermediary countries – clear Country of Origin
Auto HS Code Generate
Smart Hs Code auto classify item HS Code, no guesswork
Smart documentation
Air Waybill and e-invoice automatically generated for every shipment.
DDP shipping option
Prepay duties and taxes – full compliance
60+ Courier Service Options
Choose reliable, compliant carriers
End-to-end tracking
Full visibility from pickup to delivery using EasyTrack
Simple Steps to Book Direct International Shipping
1. Click on “International” Tab.
2. Enter your origin and destination postcodes as well as parcel weight and click “Quote & Book” button.
3. Choose your preferred courier services and book now.
4. Fill in the sender’s, receiver’s details and parcel details then proceed to payment.
