Transshipment plays a critical role in Pakistan’s import–export and transit trade framework. Under Section 121 of the Customs Act, 1969, transshipment allows goods to move from one customs station to another—or onward to a foreign destination—without immediate payment of customs duty, subject to specific legal conditions.
This article breaks down the law in simple, interactive terms, explains the multimodal scheme, and highlights what has changed with automation and risk management systems in tax year 2026.
🔍 What Is Transshipment?
Transshipment refers to the transfer of imported goods from one customs station to another customs station, or to a foreign destination, before clearance for home consumption, and without payment of duty at the first point of entry.
In simple words:
👉 Goods enter Pakistan at one port
👉 They are shifted to another port or sent abroad
👉 Customs duty is deferred until final destination (if applicable)
📜 Legal Basis: Section 121, Customs Act, 1969 (2026)
Section 121 provides the statutory framework for transshipment and outlines when and how it is allowed.
🧾 Section 121(1): Transshipment Without Payment of Duty
Under subsection (1):
• The owner of imported goods may apply for transshipment
• Goods must be:
o Imported at a customs station
o Specially and distinctly manifested as “for transshipment” at the time of import
• The appropriate officer may allow transshipment:
o Without payment of customs duty
o With or without security or bond
• Purpose:
o Movement to another customs station in Pakistan, or
o Export to a foreign destination
💻 Automation Update (2026)
At customs stations where the Customs Computerized System (WeBOC) is operational:
✔ Transshipment may be automatically authorized
✔ Subject to risk selectivity criteria
✔ Reduces manual intervention and clearance delays
🚢 Section 121(2): Multimodal Transshipment Scheme
The law empowers the Federal Board of Revenue (FBR) to authorize carriers under a multimodal transport scheme.
What Is Multimodal Transport?
Multimodal transport involves multiple modes of transportation (sea, road, rail, or air) under one transport document, such as:
• Multimodal Bill of Lading
• Air Waybill
Key Features of the Multimodal Scheme
✅ No Separate Permission Required
Goods transported under this scheme:
• Do not require distinct approval for transshipment
• Can move directly from:
o Customs station of first entry
o To the customs station of destination
🧍 Responsibility of Principal Carrier
•The principal carrier issuing the transport document is:
o Fully responsible for the sanctity and safety of cargo
o Liable during movement between customs stations
🎯 Risk Management System (RMS) Exemption
• Goods under the multimodal scheme are:
o Not subject to RMS at the first customs station
o Risk assessment applies at the destination instead
🪪 Section 121(3): Licensing of Carriers
• The Board may grant licenses to carriers
• Licensed carriers can operate under the multimodal scheme
• Licenses are:
o Subject to conditions imposed by FBR
o Revocable in case of violations
📌 Why Transshipment Matters in 2026
✔ Faster cargo movement
✔ Reduced congestion at ports
✔ Improved regional transit trade
✔ Lower upfront cost for importers
✔ Alignment with international trade facilitation standards
📊 Quick Snapshot: Transshipment at a Glance
| Aspect | Key Detail |
| Duty Payment | Not required at first entry |
| Manifest Requirement | Mandatory |
| Automation | Enabled via Customs Computerized System |
| Multimodal Scheme | Yes |
| Carrier Responsibility | Principal carrier |
| RMS Applicability | Exempt at first entry (multimodal) |
❓ Frequently Asked Questions (FAQs)
Q1: Is customs duty waived permanently on transshipment goods?
No. Duty is deferred and becomes payable if goods are cleared for home consumption in Pakistan.
Q2: Can any transporter use the multimodal scheme?
No. Only FBR-licensed carriers are allowed.
Q3: Is transshipment allowed to foreign destinations?
Yes, provided goods are properly manifested and approved.
🧠 Final Takeaway
Section 121 of the Customs Act, 1969—as updated for 2026—reflects Pakistan’s shift toward automation, risk-based controls, and trade facilitation. Transshipment, especially under the multimodal scheme, offers a faster, more efficient route for cargo movement while maintaining customs oversight.
⚠️ Disclaimer: This article is intended for general information and educational purposes only. It summarizes provisions of the Customs Act, 1969, as updated for tax year 2026, and does not constitute legal, tax, or professional advice. While every effort has been made to ensure accuracy, laws, rules, procedures, and interpretations may change or vary based on notifications, customs stations, or specific case facts. Readers are advised to consult the relevant statute, rules, SROs, and official guidelines issued by the Federal Board of Revenue (FBR) or seek advice from a qualified customs or legal professional before making any decisions or taking action based on this information.