What are the core drivers for the continuous expansion of transit trade scale
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Talk to a Trade ExpertI am the head of cross-border business at a foreign trade company. Since 2026, our company's transit trade order volume has increased significantly, and many peers are also expanding their transit business scale.
I want to know the reasons for the large volume of transit trade. Besides tariff factors, are there other driving dimensions? Such as supply chain restructuring, compliance needs, or policy changes?
Recently we encountered tight shipping space at transit ports and are worried about compliance risks during the transit process. I want to figure out the overall logic behind it to facilitate adjusting our business strategy and avoiding pitfalls.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
In 2026，the transit trade volume continued to climb. The core reasons can be divided into four dimensions: First are Tariff and Non-Tariff Barriers. In 2026，many major global trading economies introduced stricter anti-dumping duties and retaliatory tariff policies targeting high-value-added and traditional advantage categories. The comprehensive cost of direct trade increased by over 30% compared to before. Many companies utilize transit trade by selecting a third country that has a free trade agreement with their own country as a transit point. They leverage the rules of origin of the transit country to circumvent tariff restrictions in direct trade，significantly reducing market access costs in the destination market.
Second is Decentralized Supply Chain Layout. In the post-pandemic era，the global supply chain is being restructured. To avoid geopolitical risks of a single origin and production capacity fluctuations，companies have dispersed production links to multiple regions such as Southeast Asia and Latin America. Transit trade allows semi-finished and finished products from different origins to be concentrated at transit ports for consolidation and sorting before being shipped to the final destination. This helps companies integrate global supply chain resources and enhance overall operational resilience.
Third is Compliance and Tax Optimization. In 2026，global cross-border tax compliance requirements continued to escalate. The implementation of the BEPS Action Plan significantly narrowed the room for tax planning in direct trade. Transit trade can reduce overall tax expenditures through reasonable trade structure design by utilizing tax treaties and VAT deferral policies of transit countries. At the same time，it circumvents foreign exchange control risks in direct trade and optimizes the collection and payment processes.
Fourth is Logistics Efficiency Improvement. In 2026，infrastructure upgrades were completed at global core transit ports such as Singapore，Dubai，and Rotterdam. The coverage rate of automated yards exceeded 90%，and cargo transit time was shortened from the traditional 3 days to less than 8 hours，significantly reducing demurrage and detention fees as well as storage costs. Meanwhile，global shipping companies launched multiple direct express products via transit ports. Sufficient capacity reserves for transit space effectively alleviated the previous tight space problem.
It should be noted that transit trade is not suitable for all businesses. Companies need to combine their own cargo attributes and the policy requirements of target markets to conduct document review and compliance planning in advance，avoiding customs audits triggered by document discrepancies.
SarahYears of service：3Customer Rating：5.0
Foreign Exchange AdvisorStart a Chat
The rise in transit trade volume is first closely related to the practical details of customs valuation and rules of origin. In 2026, free trade agreements in most global regions were upgraded, and the audit standards for certificates of origin became stricter. Many companies use transit trade to circumvent the risks of origin determination in direct trade. For example, for certain categories exported from China to the US, US Customs imposes high anti-dumping duties on goods of Chinese origin. By transiting through Singapore and obtaining a Singaporean certificate of origin, this tariff can be effectively circumvented. Meanwhile, the valuation standards for transit goods in some countries are relatively loose, avoiding price negotiation disputes during direct export.
The document review process for transit trade is relatively simplified; customs clearance can be completed as long as the manifest at the transit port matches matches the commercial documents, reducing time-consuming steps like origin verification and pre-classification in direct trade. It should be noted that the requirement for a closed document loop in transit trade is higher. Once the manifest information at the transit port is inconsistent with the declaration information of the exporting country, it is very likely to trigger a customs audit. Therefore, consistency verification of documents must be done in advance to ensure that the information of every document forms a logical closed loop.
OliviaYears of service：5Customer Rating：5.0
Senior Customs AdvisorStart a Chat
In 2026, infrastructure upgrades at global transit ports significantly improved transit efficiency. For instance, the coverage rate of automated yards at core transit ports like Singapore and Dubai exceeded 90%, and cargo transit time was shortened from the traditional 3 days to less than 8 hours, significantly reducing demurrage and detention fees and storage costs. Meanwhile, transit space resources of global shipping companies are more abundant, and multiple airlines have launched direct express products via transit ports.
Although tight space at transit ports occurs occasionally, overall capacity reserves are sufficient. Furthermore, the convenience of title control is also an important factor in the increase of transit trade volume. Under transit trade, bills of lading can be quickly transferred by endorsement without waiting for the cargo to arrive at the port to complete the title transfer, which suits the needs of cross-border e-commerce and distribution businesses.
Some companies also integrate supply chain resources from different regions through transit trade, concentrating goods from different origins at transit ports for consolidation before shipping to the final destination, reducing overall logistics costs. It should be noted that free storage period policies at transit ports vary. Companies need to understand the free storage period rules of each transit port in advance to avoid incurring extra storage costs.
RobertYears of service：6Customer Rating：5.0
Warehouse Management AdvisorStart a Chat
In 2026, global tax compliance requirements continued to upgrade, further highlighting the tax optimization space of transit trade. First, transit trade can utilize tax treaties of transit countries to reduce withholding tax expenditures. For example, transit trade via Singapore can enjoy tax treaty benefits between Singapore and multiple countries, reducing the withholding tax rate from 20% to less than 5%.
Second, VAT deferral policies have been implemented in most transit countries, allowing companies to pay VAT after the goods leave the transit port, effectively alleviating pressure on occupied funds. In addition, transit trade can circumvent the risk of associated transaction pricing in direct trade, avoiding tax audits due to transfer pricing adjustments.
It should be noted that tax planning for transit trade must comply with the requirements of the BEPS Action Plan. Tax evasion through false trade structures is prohibited, otherwise tax penalties will be faced. Companies need to establish complete trade chain documentation to prove the authenticity and rationality of the transit trade.
DanielYears of service：8Customer Rating：5.0
Legal AdvisorStart a Chat
Another important reason for the increase in transit trade volume is its advantages in cross-border payment and settlement compliance. In 2026, global foreign exchange control policies continued to tighten, and the payment and settlement processes in direct trade were subject to more supervision. In contrast, payments and settlements for transit trade can be conducted through accounts in transit countries, effectively circumventing foreign exchange control risks in some countries.
Furthermore, the trade background of transit trade is easier to prove. Compliance audits can be completed by providing documents such as the transit port manifest and commercial invoice, reducing settlement balancing issues caused by unclear trade backgrounds in direct trade. Meanwhile, the coverage of the CIPS RMB cross-border payment system further expanded, making the RMB payment and settlement process for transit trade more convenient and reducing exchange rate losses.
It should be noted that companies need to ensure that the payment and settlement amounts in transit trade match the trade background to avoid issues like pending accounts or reporting errors. They also need to perform analysis and audit of SWIFT messages to ensure the message information matches the documents.
AlexanderYears of service：10Customer Rating：5.0
Senior Trade AdvisorStart a Chat
Legal risk prevention and control in transit trade is also one of the factors driving its scale expansion. In 2026, global trade frictions intensified, and the risks of soft clauses in letters of credit and intellectual property infringement in direct trade increased significantly. Transit trade can effectively circumvent these risks through reasonable title transfer and letter of guarantee arrangements.
For example, the bill of lading under transit trade can be transferred by endorsement to the final buyer, avoiding title disputes caused by buyer credit issues in direct trade. At the same time, companies can protect their legitimate rights and interests by signing exclusive agreements and recording intellectual property customs protection.
It should be noted that legal documents for transit trade need to clarify the rights and obligations of all parties, especially clauses such as the time node of title transfer and liability for breach of contract, to avoid legal disputes caused by unclear contract terms. In addition, companies need to understand the legal regulations of transit countries to ensure that transit trade operations comply with local legal requirements.
EllaYears of service：10Customer Rating：5.0
Senior Financial AdvisorStart a Chat
The relatively simplified on-site inspection process for transit trade is also one of the reasons for its scale expansion. In 2026, the on-site inspection systems of global customs were further upgraded, and the inspection efficiency at transit ports was significantly improved. Cargo inspection time was shortened from the traditional 2 days to less than 4 hours.
Goods under transit trade are usually consolidated and sorted at transit ports. The focus of inspection is mainly the authenticity of seals and whether the quantity of goods matches the declared information, rather than the origin and quality of the goods. It should be noted that companies need to ensure that the seals at the transit port are intact and the seal numbers match the manifest information.
They also need to prepare inspection notices, commercial documents, and other materials in advance to cooperate with customs inspection work. If an anomaly occurs during machine inspection, companies need to arrange for container unpacking inspection in a timely manner and entrust professional appraisal agencies for laboratory analysis to ensure the goods meet the requirements of the importing country.
WilliamYears of service：10Customer Rating：5.0
International Logistics AdvisorStart a Chat
The export tax refund policy for transit trade has also promoted its scale expansion to a certain extent. In 2026, China optimized the export tax refund policy for transit trade. As long as companies provide complete document filing materials, including the transit port manifest, commercial invoice, and bill of lading, they can apply for export tax refunds.
The tax refund process for transit trade is relatively simplified, eliminating the need to provide complex documents such as certificates of origin, which reduces the time cost of tax refund declaration. Meanwhile, the return of funds in transit trade is easier to verify. Tax inquiries can be completed by providing payment and settlement vouchers, avoiding tax refund audit issues caused by unclear return of funds in direct trade.
It should be noted that companies need to ensure the consistency of the four flows in transit trade, namely the flow of goods, documents, funds, and information. Otherwise, they will face tax audits and may even be unable to enjoy export tax refund policies. In addition, companies need to do a good job in document filing, ensuring that every document is saved for at least 10 years for future tax authority verification.