What is a Triangular Trade, Triangle Shipment or Foreign-to-Foreign Shipment and what are the Benefits?
Learn about What a triangle shipment is and how we can help you succeed
A Triangle shipment, Triangle trade, Triangular Shipment, Triangular Trade or Foreign-to-Foreign shipment is when there are 3 countries and 3 parties involved in a transaction.
What is a Foreign-to-Foreign / Triangle Shipment?
As a U.S. company or individual, a foreign-to-foreign shipment occurs when cargo is shipped from one country to another without entering the U.S.
What are the benefits of a Foreign-to-Foreign / Triangle Shipment?
The benefits of a U.S. company or distributor offering such service is reduce supply chain costs, decrease transit time (a.k.a. transportation time) from origin to destination, and optimize the supply chain while dealing with one entity: the U.S. freight forwarder / logistics provider, in this case AEL.
Example 1: There is a shipment with an exporter/shipper/supplier (a.k.a. manufacturer/producer) located in China, a seller in the U.S., and a consignee/end user/distributer (a.k.a. final buyer) located in Colombia.
The seller does not want the identity of the manufacturer/producer (exporter) to be exposed to the consignee in the third country to avoid the consignee trying to contract directly with the exporter. The seller is the one who contracted with the exporter located in China. The seller deals with a U.S. forwarder to provide freight forwarding and logistics services from origin to destination without the seller being identified on any of the shipping documents.
The same scenario can apply for a foreign company decided to ship from one country to another without having the cargo touch their home country. An example would be a Greek company that decides to ship from Brazil to Spain.
Document Switching – “Switch” Bill of Lading / “Switch” Air Waybill
In order to protect your sources (i.e. your suppliers), you must work with a freight forwarder / logistics company that has the experience in such transactions and also has a worldwide network of partners to provide you full-service door to door logistics if needed.
Set 1 Documents
If the shipment is an ocean shipment, a “Switch” Bill of Lading also known as “Blind” Bill of Lading (let’s call it Set 1 documents) must be issued by the forwarder to the supplier at the time of export for their export customs purposes. The actual buyer’s information will not be listed on this document. The same transaction would follow if it is an air shipment a “Switch” Air Waybill or “Blind” Air Waybill would be issued by the forwarder to the supplier. We would not send the original Commercial Invoice (CI), Packing List (PL) or any additional documents such as a Certificate of Origin (COO) or Health Certificate to the buyer since they contain the supplier’s information.
Set 2 Documents
The second set of Bill of Ladings or Air Waybills will contain your information as the “seller” and your buyer’s information as the “buyer” – this way, your buyer can proceed with customs clearance and delivery. Even if you, as the seller are offering door delivery services, whether DAP/DDU or DDP, you still want to proceed with this process to avoid the possibility of the buyer finding out who your supplier is. AEL has experience throughout the lifecycle of the shipment and can protect your interests at all points of the transaction.
At this point, the freight forwarder, in this case AEL, would also ask you, the seller to provide a CI, PL and any additional documents such as a COO or Health Certificate showing you as the “seller” and your buyer as the “buyer” with your selling price on the CI. AEL can walk you through this entire process and offer additional consulting services where needed.
There are many scenarios for Foreign-to-Foreign / Triangular shipments.
Example 2: a new business shipping from Vietnam to the U.K. (and they are a U.K. based company) and selling to a distributor or on a e-commerce platform such as Amazon, eBay, or Etsy. Shortly thereafter, they find a customer in the U.S. for their product, and they need to work with a freight forwarder/logistics company who understands how to protect their interests and offer full-service logistics solutions for them. This includes obtaining the necessary foreign entity customs bond if they want to offer DDP service for U.S. Bound shipments. If they are shipping to other countries, the freight forwarder/logistics provider must understand what the import regulations are in the third country if they are offering door delivery services such as DAP/DDP.
Protecting Your Exporter/Supplier/Shipper’s information in a Foreign-to-Foreign shipment is key to success.
Make sure you interview your freight forwarder / logistics provider prior to engaging in this type of shipment.
Warning: A Switch Bill of Lading is not valid for all shipments. You have to verify with your freight forwarder if your cargo insurance includes coverage for a switch bill of lading or air waybill and whether it is considered a valid way of shipping for export/import/bank/insurance purposes. You have to also make sure cargo details on the two sets of documents are exactly the same. Finally, there can only be one set of documents issued, never two sets. The second set of documents must be issues only after the first set has been collected, either by you as the seller from the supplier or by your freight forwarder on your behalf.
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