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Transit and LCL Shipping: Making the Most of Both

Transit and LCL Shipping: Making the Most of Both

Transit and LCL Shipping: Making the Most of Both

How transit and LCL solutions contribute to logistics efficiency in ocean freight

April 11, 2023 Midas Global Team 3 min read

An overwhelming 90% of world trade moves by sea — yet 9 countries in Africa, 14 in Europe, and 7 in Asia have no coastline at all. For these landlocked nations, maritime trade is only possible through transit arrangements.

Transit shipping is the process by which a cargo journey — from its country of origin to its destination — continues via a change of vessel or transport mode, due to economic, political, or physical constraints.

The routes of the world's largest container vessels (those with a capacity of 12,000 TEU or more) typically follow an east-to-west corridor: departing Tokyo, calling at Singapore, Dubai, Port Said, Malta, Marseille, Barcelona, Rotterdam, and Hamburg. Because adding more port calls to these mega-vessel routes would lengthen voyage times and erode profitability, it is simply not economical to do so. Instead, cargo is transhipped at major hub ports onto smaller feeder vessels, which carry it to its final destination — at more accessible costs for the end receiver.

90% Share of sea freight in world trade
30 Landlocked countries worldwide
~50% LCL transshipments via Dubai & Singapore

A Lifeline for Landlocked Countries

Ports such as Djibouti, Tema, Dhaka, and Koper serve as vital gateways for landlocked nations. Specialized logistics providers at these ports offer tailored transshipment solutions, and the International Maritime Organization (IMO) has established standards to ensure that landlocked countries can access and benefit from global sea trade.

Political factors also play a significant role. The tensions between Russia and the West that escalated in 2022 are a clear contemporary example of how geopolitics can fundamentally reshape transit shipping routes.

LCL Shipping and Its Economic Case for Transit

LCL (Less than Container Load) shipping is another mode that relies heavily on transit. The driving force here is primarily economic. Many island nations in the Atlantic, for instance, must source goods through relatively well-connected hubs like Singapore or New Zealand, simply because direct services are unavailable or prohibitively expensive.

"Dubai, Singapore, Barcelona, and Rotterdam have each developed specialized handling procedures for LCL transshipment. Together, these four cities account for nearly 50% of all LCL cargo moved globally."

Turkey's Transit Potential

Istanbul sits in an almost ideal geographic position to become a major transit hub — particularly for Black Sea-bordering countries, for which it is a natural transshipment point. Yet a "big country syndrome" of sorts has kept Turkey's share of the global transit pie smaller than its location warrants.

While Turkey has recently eased its transit customs regime, one key gap remains: no domestic operator has yet adopted the free storage time practices that are standard at the world's leading transit hubs. This single factor continues to hold back Istanbul's competitiveness as a transshipment centre.

Conclusion

Transit shipping is not about dividing up an existing market — it is about growing the whole pie. The sooner this distinction is understood and acted upon, the better positioned Turkey will be to claim its rightful share of global logistics flows.

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