What is abandoned cargo? Precautions you can take to manage this risk.
Shipping internationally has its pros and cons. While exporters and importers have the potential , there are also big losses. One such loss is due to abandoned cargo which is stressful for shipping line, shippers, port authorities and freight forwarders alike. Here in this blog we have thrown light on everything related to cargo abandonment:
When is cargo considered to be abandoned?
A cargo is said to be abandoned if:
-After repeated reminders, the consignee of the bill of lading does not take the delivery of the cargo and it lies uncleared with the shipping line.
-The consignee of the bill of lading is untraceable or is not responding to the demand of accepting the cargo.
-The consignee comes forward and tells the shipping line and/or port about his/her intention of not accepting the cargo.
A cargo is said to be abandoned if:
-After repeated reminders, the consignee of the bill of lading does not take the delivery of the cargo and it lies uncleared with the shipping line.
-The consignee of the bill of lading is untraceable or is not responding to the demand of accepting the cargo.
-The consignee comes forward and tells the shipping line and/or port about his/her intention of not accepting the cargo.
Consignee’s reasons of not accepting the cargo
Yes! The consignee can have his/her reasons of abandoning the cargo, some of which are mentioned below:
-Consignee may lack the requisite money needed to pay the duty, tax, VAT, port or other costs related to clearance of the cargo.
-Consignee is yet to receive the documents that are needed to release and clear the cargo in time.
-In case wrong cargo is sent and the buyer doesn’t want to receive it nor does he/she wants to invest in sending it back.
-If there is a dispute between the shipper and the consignee, and the latter wants to sort it before accepting the cargo.
Yes! The consignee can have his/her reasons of abandoning the cargo, some of which are mentioned below:
-Consignee may lack the requisite money needed to pay the duty, tax, VAT, port or other costs related to clearance of the cargo.
-Consignee is yet to receive the documents that are needed to release and clear the cargo in time.
-In case wrong cargo is sent and the buyer doesn’t want to receive it nor does he/she wants to invest in sending it back.
-If there is a dispute between the shipper and the consignee, and the latter wants to sort it before accepting the cargo.
Well, it may be easier for consignee to abandon the cargo but not for the shipping line as the line is liable for a lot of things; paying the port handling costs, storage costs, transportation cost and possible unpaid freights.
As the line uses the port facilities every day, it will have to clear the bills else the port may not allow the line to further use its services. Not just this, if the cargo is containerized, there will be additional lease charges that the line will have to bear. Even if the line owns the container, there will still be equipment operating cost.
All in all, it can be concluded that consignee’s ignorance can cause losses to everyone involved, be it the shipping line or the freight forwarder. Why bear losses due to someone else’s ignorance, right? So here are a few precautions that can be taken to minimize the losses due to abandoned cargo.
As the line uses the port facilities every day, it will have to clear the bills else the port may not allow the line to further use its services. Not just this, if the cargo is containerized, there will be additional lease charges that the line will have to bear. Even if the line owns the container, there will still be equipment operating cost.
All in all, it can be concluded that consignee’s ignorance can cause losses to everyone involved, be it the shipping line or the freight forwarder. Why bear losses due to someone else’s ignorance, right? So here are a few precautions that can be taken to minimize the losses due to abandoned cargo.
Precautions
1. As a shipping line, you should always make sure to ask the customer at the time of booking whether the cargo is going to be shipped as Freight Prepaid, where the freight charges will be paid by shipper or as Freight Collect also known as Collect upon Arrival which implies that the consignee will be responsible for the freight as well as additional charges.
1. As a shipping line, you should always make sure to ask the customer at the time of booking whether the cargo is going to be shipped as Freight Prepaid, where the freight charges will be paid by shipper or as Freight Collect also known as Collect upon Arrival which implies that the consignee will be responsible for the freight as well as additional charges.
When the cargo is shipped as Freight Collect, shipping line should request the destination port agent to ask the consignee for his confirmation in writing so that everything related to cargo is settled before its arrival at the port. In case the consignee is hesitant to give a written confirmation, shipping line should discuss it with the shipper and if needed ask the shipper to prepay the freight at origin.
2. Other than the above mentioned precaution, there are also certain signs that indicate the chances of cargo being abandoned; shipping line should pay attention to such signs in order to avoid being victim of cargo abandonment. For instance, if the shipping line has sent the arrival notification to the consignee but the latter has not replied within reasonable average time frame of 7-10 days, all concerned parties (shipper, load port agent and shipping line) should be notified ASAP. Shipper when alerted should be asked if there is any dispute between him and consignee due to which consignee is not willing to clear the cargo. Knowing about the dispute or any other the reason of cargo abandonment will make it easier for shipping line to make a decision.
This was all about cargo abandonment. If you are curious to know more about it, ask any freight forwarder who will be able to cite real examples of how he has suffered losses sue to abandoned cargo and what precautions he takes to avoid it.
This was all about cargo abandonment. If you are curious to know more about it, ask any freight forwarder who will be able to cite real examples of how he has suffered losses sue to abandoned cargo and what precautions he takes to avoid it.
