{"id":5218,"date":"2026-08-26T08:38:54","date_gmt":"2026-08-26T08:38:54","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=5218"},"modified":"2026-08-26T08:38:54","modified_gmt":"2026-08-26T08:38:54","slug":"trade-compliance-word-of-the-day-transshipment","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=5218","title":{"rendered":"Trade Compliance Word of the Day: ‘Transshipment’"},"content":{"rendered":"
\n

Among the reasons for the most recent blowup in the trade negotiations between the U.S. and Canada is the issue of rampant transshipment, or, the transfer\u00a0of goods or containers from one transport mode to another at a middle\u00a0location on their way\u00a0to a final destination,\u00a0which Canada is allegedly not only tolerating, but encouraging, at the expense of not just the U.S.\u00a0but the free world.\u00a0<\/div>\n
This is a challenge, not only because it’s the kind of industry jargon that makes a political issue difficult to discuss, but also because the word has multiple meanings, and not all are bad.\u00a0<\/div>\n
So let’s take a moment to define this unusual term, so the U.S.-Canada trade debate can make sense.\u00a0<\/div>\n
Start with ocean transportation.\u00a0<\/div>\n
Since the dawn of intermodal container shipping, the shipping industry has settled on a very efficient system for transporting goods all around the world.\u00a0 Containership lines arrange regular service between major ports, and then cargo from more minor ports is shipped to those ports on smaller “feeder” vessels.\u00a0 \u00a0<\/div>\n
The port at which cargo is transferred from that first ship to the second is known as the transshipment port.\u00a0\u00a0\u00a0<\/div>\n
Say you’re shipping goods from Calcutta to Los Angeles.\u00a0 A feeder vessel collects containers from a dozen ports around the Subcontinent, like Calcutta, Chennai, and Mumbai, then transfers these containers to a larger ship at Singapore; then that ship sails across the Pacific for Los Angeles.\u00a0 Singapore is the transshipment port because that’s where the goods changed vessels, without ever actually entering the commerce of that intervening nation.\u00a0<\/div>\n
There are also plenty of banking-related tangents here, as there’s a difference in the law between unopened containers being transferred, and loose or bulk cargo being transferred.\u00a0 While we would call the port a transshipment port in either case, we would not <\/em>say that the goods <\/em>were transshipped if an unopened container were transferred, but we would <\/em>say the goods were transshipped if loose crates or other bulk cargo were unloaded and reloaded at that point.\u00a0 Fortunately, international banking Letters of Credit (“LoCs”) are not the subject at hand, so this particular complexity is interesting, but not important to us.\u00a0<\/div>\n
Suffice to say that a transportation transshipment is just a fact of international routing, and is not in itself a problem for our trade negotiations.\u00a0<\/div>\n
Now let’s look at United States export controls.\u00a0<\/div>\n
All countries have some form of export controls — government rules governing the sharing of information, goods, technology and funds around the world.\u00a0 There are country controls, entity controls, and product and technology controls, each of them an extensive set of laws restricting every business’s selection of vendors, customers, and trade routes, for foreign policy and national security reasons.\u00a0<\/div>\n
Typical examples would include our longtime bans on considerable\u00a0trade with Cuba, virtually all trade with North Korea, and Iran, and our somewhat less severe bans on a number of other countries.\u00a0 Then there are our absolute bans on doing business with terrorists, drug cartels and organized crime, and the front companies that support them. And then there are our extensive lists of products, materials, components and technology that require government permission to share or sell, such as nuclear, biological and chemical weaponry, and the technology involved in manufacturing such things.\u00a0<\/div>\n
These bodies of law, as enforced by the Departments of State, Commerce, Defense, Treasury, and Energy, all last the entire life of the product.\u00a0 A shipper’s obligation doesn’t end upon his sale; it can’t.\u00a0\u00a0\u00a0<\/div>\n
So for example, if it’s illegal for an American to sell something to Iran, then it’s just as illegal to sell something to a German middleman who intends to resell it to Iran.\u00a0 A sanction is pointless if it can be defeated by inserting a middleman.\u00a0 \u00a0So all American businesses have the responsibility of not only knowing to whom they are selling, but also knowing they can trust that their customer will also honor the U.S. export controls.\u00a0<\/div>\n
Illegal diversions, such as allowing that German middleman to reroute the shipment to Iran, constitute an illegal transshipment under the export controls.\u00a0<\/div>\n
Another example would be planning a route to a legal destination that includes a leg of travel through a banned area.\u00a0<\/div>\n
So, for example, we could not plan to ship most products to the Dominican Republic by traveling through Cuba; that would give the Cubans a chance to get hold of the goods while en route<\/em>.\u00a0 So traveling through Cuba, even on the way to a legal destination, would also be an illegal transshipment, under the export controls.\u00a0<\/div>\n
Penalties include massive fines, the loss of export privileges, even imprisonment.\u00a0<\/div>\n
A look at country of origin is instructive, too.\u00a0<\/div>\n
As you have probably gathered by now, there is quite a bit of spillover between these areas.\u00a0 Transportation and trade law are necessarily related, especially when Customs enters the discussion.\u00a0<\/div>\n
Duties, tariffs, and some other fees \u2013 as well as quotas and other import permissions \u2013 are based on the classification and origin of goods, which can sometimes be easily disguised by the unscrupulous trader.\u00a0<\/div>\n
Imagine, for example, coils of steel sheet made in China, which might fall under some of our more severe punitive tariffs. The same coils of steel sheet, if manufactured in Canada, would receive different, lower tariffs.\u00a0<\/div>\n
It might be tempting for a crooked Canadian business to switch the marking, and claim Canadian origin on these Chinese goods, enabling a shipment to get a lower duty rate upon arrival in the U.S.\u00a0<\/div>\n
But since that might be easier to notice with some commodities, that middleman may do some minor processing, just a final step or two, thinking it could legitimately qualify as a change in origin, so the goods have really been transformed into Canadian goods, truly deserving those lower rates.\u00a0<\/div>\n
Unfortunately for them, the rules anticipate such work-arounds, so these regulations usually don’t allow minor operations such as mere testing or repackaging, cutting to size, plating or painting, or simple machining to count as a change in origin. If only such minor steps are done in Canada, those Chinese goods are still Chinese, and still get the China tariff rates, so claiming otherwise constitutes fraud.\u00a0<\/div>\n
A more difficult challenge is the process of re-shoring supply chains of finished products, assemblies, or complex components.\u00a0 Many companies continue to source some parts from China, but hope that integrating a few other components into the assemblies in another country might qualify for another origin change. Sometimes it does, but often, it does not.\u00a0 Each situation is unique, and an honest and wise importer seeks legal advice before such changes, because the accusation of trade fraud is costly to reputation and pocketbook alike.\u00a0<\/div>\n
This country of origin transshipment \u2013 the Customs type of transshipment – is the issue at the heart of the current U.S.-Canada debate.\u00a0<\/div>\n
This brings us to the 2026 U.S.-Canada trade negotiations.<\/div>\n
If reports of the negotiations are correct, Prime Minister Mark Carney’s team appears to be demanding that Canadians get Canadian-origin tariff treatment even on Chinese goods to which Canadians have made only the most superficial of changes, a position that flies in the face of long-established international trade law.\u00a0<\/div>\n
Carney appears to be denying the importance of these distinctions, perhaps counting on the arcane nature of these issues to enable him to bamboozle the public into thinking that it’s the Trump administration that’s being unreasonable here.\u00a0<\/div>\n
But the Trump administration is looking out for all North American workers in these discussions, not just the citizens of the United States.\u00a0 By demanding the traditional rule that goods really originate in Canada to get the favorable duty rates for Canadian goods (as opposed to Chinese), the Trump administration is actually trying to protect Canadian jobs as well.\u00a0<\/div>\n
The Carney approach benefits only the corrupt middleman and the Chinese government; it doesn’t benefit the Canadian laborer at all.\u00a0 And the Trump administration, once again, is trying to singlehandedly protect the workers of the entire free world against the corruption of Beijing.\u00a0<\/div>\n
The question before us, in this subset of the debate, is whether the evils of illegal transshipment are indeed so obscure that the Chinese – and their allies in Canada – can pull the wool over their eyes of the public.\u00a0 \u00a0<\/div>\n
John F. Di Leo is a Chicagoland-based international trade compliance trainer, public speaker, and consultant at The Trade Compliance Coach. Read his book on the surprisingly numerous varieties of vote fraud, The Tales of Little Pavel; his biting political satires on the Biden-Harris years, Evening Soup with Basement Joe, Volumes I, II, and III; his collection of essays on public policy in the 2020s, Current Events and the Issues of Our Age; and his brand new book about the lives and times of our Founding Fathers, The Founding Generation, The Patriots Who Built America, all available in eBook or paperback, exclusively on Amazon.\u00a0<\/strong><\/em><\/div>\n
Image: Pixabay \/\/ Pixabay Content License<\/em><\/div>\n<\/p>\n

Read more No matter how hard Americans work, the government spends more<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Among the reasons for the most recent blowup in the trade negotiations between the U.S. and Canada is the issue of rampant transshipment, or, the transfer\u00a0of goods or containers from one transport mode to another at a middle\u00a0location on their way\u00a0to a final destination,\u00a0which Canada is allegedly not only tolerating, but encouraging, at the expense […]<\/p>\n","protected":false},"author":1,"featured_media":5217,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,2057],"tags":[2071],"class_list":["post-5218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-trade","tag-related-topics-trade"],"yoast_head":"\nTrade Compliance Word of the Day: 'Transshipment' - Interstate Logistics Hub<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/interstatelogisticshubs.com\/?p=5218\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trade Compliance Word of the Day: 'Transshipment' - 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