Transhipment: What Indonesia Opposes Following Trump's 19% Tariff

TEMPO.CO, Jakarta - Indonesian Trade Minister Budi Santoso emphasised that the government rejects transhipment practices with other countries. He stated that Indonesia adheres to the agreement with the United States after U.S. President Donald Trump and Indonesian President Prabowo Subianto negotiated import tariffs.

Indonesia received a reduction in import tariffs to 19 percent, down from the previous 32 percent. This figure is the lowest in Southeast Asia, raising concerns that Indonesia may be used for transhipment by countries with higher Trump tariffs.

"If it doesn't comply with the agreement, it could change again. So, it has to be following the rules, following the agreement, in accordance with the agreement that will be reached between us and America," said Budi in Jakarta on Thursday, July 17, 2025, as quoted from Antara.

So, what is transhipment?

Understanding Transhipment

Transhipment is the activity of transferring or shipping goods from one country to Indonesia, then sending them to another country after obtaining specific documents from Indonesia. In this case, countries with higher Trump tariffs have the potential to engage in transhipment practices to avoid reciprocal tariffs entering the U.S.

The Trade Minister stated that transhipment is prohibited in trade. Transhipment regulations are also required during the negotiation process. "Transhipment isn't allowed either. Now, for example, like in Vietnam, it's been determined. If it's subject to (Trump's tariffs) at 20 percent, transhipment goods will be subject to 40 percent," said Budi

The regulations regarding transhipment in Indonesia are governed by the Directorate General of Customs and Excise Regulation No. PER-29/BC/2024 on Amendments to the Directorate General of Customs and Excise Regulation No. PER-10/BC/2017 concerning the Procedures for the Entry and Exit of Goods to and from Bonded Logistics Centres in the Framework of Export and/or Transhipment.

Based on this policy, transhipment is defined as the re-export of goods originating from outside the customs area from a bonded logistics centre.

Advantages and Disadvantages of Transhipment

According to icecargo.com, the transhipment method is sometimes necessary due to the lack of direct routes. Direct routes to the destination may not be available if the destination is far away, such as from London to Sydney and from Hamburg to Brisbane.

Large ships carrying containers and cargo are much more abundant than small ships, but cannot dock at small ports. In such situations, transhipment is the most effective shipping method because cargo can be transferred to smaller ships to reach its final destination.

The transhipment method can also save on cargo costs under certain conditions, for example, by unloading cargo at intermediate ports such as the Port of Klang, where costs are relatively low. In addition, transhipment becomes an effective way to avoid certain tariffs and import duties.

However, transhipment practices pose disadvantages because they consume more time. Goods require transit time, which increases. Using the transhipment method to ship cargo increases the risk of delay because time is needed to unload containers and transfer them to another ship.

Moreover, trading systems through transhipment can trigger political tensions between countries, as importers seek to avoid specific tariffs and import duties set by the destination country.

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