CTPAT Alert - Illegal Transshipping
- Admin
- Nov 12
- 2 min read
What is Transshipping?
Transshipping is the process of transferring goods from one mode of transportation to another (often from one vessel or port to another) during their journey from origin to destination. While transshipping itself is legal and common in global trade logistics, it becomes illegal when used deceptively to avoid duties, sanctions, or trade restrictions.
Increased Transshipment Activity
Customs and Border Protection (CBP) has observed a notable increase in transshipment activity as foreign exporters and U.S. importers attempt to circumvent trade enforcement measures. Specifically, illegal transshipping has been used to circumvent the following trade enforcement measures:
Avoiding Antidumping or Countervailing Duties (AC/CVD): Exporters route products through third countries to mask theoriginal country of origin, particularly when that country is subject to high duties or quotas.
Example: Country A (i.e., China) faces high tariffs on wooden bedroom furniture. Instead of shipping directly to the U.S., a Chinese manufacturing company ships its product to Vietnam, where it is relabeled as “Made in Vietnam,” and it may be lightly processed or repackaged. The goods are then exported to the U.S. as Vietnamese goods to avoid U.S. tariffs.
Evading Section 301 or Section 232 Tariffs – Especially relevant for goods from China, where exporters try to relabel Chinese-origin products as originating from nations without such tariffs.
Exploiting Free Trade Agreements (FTAs) – Some bad actors attempt to falsely claim preferential tariff treatment (e.g., under USMCA or CAFTA-DR) through fraudulent certificates of origin or minimal processing.
Other common practices are to intentionally undervalue the goods, misclassify the goods, or report incorrect quantities to reduce the tariff liability (false declaration).
High Risk Industries & Products
Heavy Penalties for Illegal Transshipping
In response, CBP has intensified targeting operations, increased supply chain audits, and continues to work closely with domestic and international partners to identify, disrupt, and penalize illicit transshipment operations.
Illegal transshipping may look like a clever strategy, but it is a violation of law and the risks and costs far outweigh the potential gains.
This practice violates Customs regulations, and if detected, businesses may face steep fines, seizure of your valuable inventory, business disruption, loss of import privileges, and criminal charges (19 U.S. Code § 1586 - Unlawful unlading or transshipment).