Transshipment: Strategic Gateways of Global Trade and India's Evolving Role

Introduction: Recent Developments in India-Bangladesh Transshipment Relations

In April 2025, India revoked the transshipment facility that previously allowed Bangladeshi exports to third countries via Indian land borders. This facility, established in 2020, enabled Bangladeshi goods to transit through India's land customs stations to seaports and airports.

The Indian government cited logistical delays and increased costs affecting its own exports as reasons for the withdrawal. This decision is expected to impact Bangladesh's trade, especially in readymade garments, and increase logistical costs. 

Understanding Transshipment

Transshipment refers to the transfer of goods from one vessel to another during their journey to the final destination, typically at intermediate ports known as transshipment hubs.

Types of Transshipment

• Port-to-Port: Cargo is moved from one ship to another at a transshipment port.

• Inland Transshipment: Cargo is offloaded at a port and transported via land to another port.

• Air-Sea or Sea-Air Transfer: Cargo shifts between different transport modes like sea and air.

India's Current Transshipment Scenario

India transships a significant portion of its cargo through foreign ports due to limited domestic capacity and port inefficiencies.

Top Transshipment Ports Used by Indian Cargo (2022-2023)

Historical Instances of Transshipment in India's Context

• 1971 Bangladesh Liberation War: Indian ports facilitated the movement of relief and military cargo via indirect routes.

• 2015 Nepal Blockade: India provided alternate transshipment routes for essential supplies to Nepal.

• 2020 COVID-19 Pandemic: Indian naval vessels utilized transshipment methods to repatriate citizens and deliver medical supplies across the Indian Ocean.

Economic Benefits of Transshipment Hubs

Countries that established early transshipment hubs have experienced significant growth in maritime trade influence.

Countries that Benefited from Transshipment

Transshipment and India’s Distress Relief Examples

India has historically used transshipment and port access agreements for humanitarian relief and strategic necessity:

• 1971 Bangladesh Liberation War: Indian ports and logistics played a critical role in moving relief and military cargo via indirect routes.

• 2015 Nepal Blockade: India offered alternate transshipment routes for food and fuel supply when Nepal faced supply constraints.

• 2020 COVID-19 Pandemic: Indian naval vessels under Operation Samudra Setu used transshipment methods to bring back stranded Indians and deliver medical supplies across the Indian Ocean.

India’s Current Transshipment Scenario

India ironically transships much of its own cargo through foreign ports like Colombo (Sri Lanka), Singapore, and Port Klang (Malaysia) due to limited domestic capacity and port inefficiencies.

Table: Top Transshipment Ports Used by Indian Cargo (2022-2023)

India's Transshipment Aspirations and Projects

India is actively developing its own transshipment infrastructure to reduce reliance on foreign ports.

Key Projects

India-Bangladesh Synergy: A Case Study

Under the 2020 agreement, goods from Kolkata or Haldia were shipped to Mongla or Chattogram in Bangladesh and then transported by road or rail to Indian states like Tripura, Mizoram, and Assam. This route reduced travel distance by over 1,000 km compared to the traditional Siliguri Corridor.

This cooperation enhanced India's Act East Policy, boosted regional trade, and supported the BBIN Initiative (Bangladesh, Bhutan, India, Nepal) for seamless cargo movement.

Challenges in India's Transshipment Ambitions

• Infrastructure Bottlenecks: Indian ports face draft limitations, congestion, and slow customs clearance.

• Global Competition: Established hubs like Colombo and Singapore have years of experience and investor trust.

• Policy Delays: Modernization of coastal shipping and cabotage laws is needed for efficient inter-port cargo flow.

• Environmental Impact: Developing deep-sea ports requires careful environmental planning.

Way Forward

1. Incentivize Coastal Shipping: Encourage domestic shipping lines to connect smaller ports to major ones.

2. Ease Customs Regulations: Implement single-window clearance systems.

3. Private Participation: Attract foreign direct investment for transshipment terminals through public-private partnerships.

4. Regional Alliances: Strengthen ties with BIMSTEC and ASEAN for maritime cooperation.

5. Green Ports: Adopt sustainable practices to reduce carbon footprint.