Answer:
Transshipments involve shipping one container to a certain transport and distribution hub, and then to another. Most of the times it is done to consolidate cargo (combine small shipments into a larger shipment) or to deconsolidate cargo(divide a large shipment into smaller ones).
Transshipments are usually 100% legal, but sometimes they are used to try to smuggle goods into a country. The smuggling doesn't mean introducing illegal things like drugs or other type of traffic, but it is also done to avoid custom duties (taxes). On the other hand, Chinese manufacturers need transshipment to lower costs and be more efficient. More than 99% of transshipments are legal and they do help to lower shipping costs.
The main purpose behind transshipments is to simply lower costs since the shipping distances are very long and factories do not send a whole ship full of containers to a single US port.
I do believe that transshipments are useful and in case some transport or distribution company wants to illegally benefit from it, then they should be severely punished. So I do believe that punitive damages are the right approach since the punishment is usually larger than the harm but it also serves as a deterrent for future smugglers. It's the same logic behind airlines who transport individuals carrying drugs, the airlines are not responsible, but the individuals that are responsible must be punished severely.
