It is not an uncommon thing for people in the shipping and logistics industry to get stuck with a huge amount of abandoned cargo at any point in time. There is even established guide and regulated measurements set by port authorities to legally channelize the abandoned goods for demurrage and detention charges recovery on behalf of the consignee or consignor.
In logistics, the consignor is the shipper of the goods and the consignee is the recipient of the goods. The ownership of the goods remains with the consignee most of the time.
What is abandoned cargo?
According to the International Federation of Freight Forwarders Associations (FIATA), a cargo is deemed abandoned when “it becomes apparent that the consignee has manifested no intention to take delivery before the expiry of the free period.” But the “free period” varies from time to time from one country to another. For example, in China, the time period for disposing of the abandoned cargo is 60 days and in the USA it’s 6 months from its unloading to a port.
Why is the cargo abandoned?
Cargo abandonment happens due to a number of reasons.
- During the global pandemic countries were closing their ports and consignees were abandoning their cargo to get rid of the added costs. Covid-19 saw tons of abandoned cargo at the port. But Covid is not the only reason behind abandoned cargo.
- Sometimes the consignee refuses to claim responsibility in case there is any dispute in quality or quantity.
- In case cargo gets confiscated due to a violation of shipping regulation then also it may become abandoned cargo if the involved party wants to avoid responsibility.
- The consignee sometimes chooses to abandon the cargo in case there is bankruptcy or is unable to pay customs duty.
- When the consignee is particularly unlucky they may get to handle goods where the consignor chooses to dump unwanted goods without any added responsibility.
Who is responsible for abandoned cargo?
This question is particularly tricky to answer as it depends on the Bill of Lading (BOL). BOL is the contract between the consignor and consignee. Most of the time the consignee is the owner of the goods. Thus, they are in charge of abandoned cargo in case that happens. Consignees can be anyone from freight forwarders to importers of goods.
What happens with abandoned cargo?
There are multiple options for freight forwarders to deal with abandoned cargo. They can either resell, auction, donate or destroy the goods. But before doing this freight forwarders must document every detail and inform the port authority. Only with the port authority’s permission and supervision can they take any steps.
Abandoned Cargo Disposal Methods
There are a number of regulated methods for abandoned cargo disposal as follows:
- The first and most preferred method for the consignee is to record every item in the cargo and inform the port authority. They can resell the listed items under the supervision of the port authority and reclaim the demurrage or detention charge.
- In case of abandoned cargo, the consignee can return the item to the consignor if the consignor is an involved party under the Bill of Lading. This can happen if the consignee is a third party or there is a claim of damage in received goods.
- Additionally, in case the consignee is a third party, they may choose to auction the items. But, they have to inform the involved authority and take their permission before doing so.
- If the consignee is a third party, they can choose to donate the listed goods for charity as well.
- Lastly, one can destroy abandoned goods under the supervision of proper authority in case there is no other way.
Precaution to Handle Abandoned Cargo
Abandoned goods can translate to huge losses for the consignee in some cases. So if you are a consignee you need to take precautions before taking charge of goods. Below are a few proven methods to safeguard your interest in case you are a consignee:
1. Beware of the Status in Bill of Lading
In case you are a third-party consignee beware of your status in the Bill of Lading. You should avoid the status of ‘principal’ party in the document rather than ‘agent’. In case you are an agent you can invoke your rights under the clause of ‘force majeure’ to avoid liability of abandoned items.
2. Force Majeure
Before you take charge of cargo, ensure that you are aware of every detail under ‘force majeure’ to exploit them to your interest.
3. Constant Communication
Be in constant communication with the receiver of the goods and inform them of the minute status of the cargo fleet to ensure they reclaim the goods. In case, there is any delay or change make sure to communicate the latest development without delay.
4. Inform Importers of the Impact
In case you are a freight forwarder agent be sure to inform the goods receivers of the consequence of goods abandonment. The importers should be aware of any detention and demurrage costs prior to undertaking the task.
5. Take Precaution
In case there is a prior sign of goods abandonment be sure to store your goods in a bonded facility to avoid steep storage costs and choose your option of disposal soon. Otherwise, you may have to take out extra money for storage costs.
Till now you are aware of the reasons for cargo abandonment and your choice and options to safeguard your interests in case this happens. But still, there is one thing that is remaining to discuss. After you deal with abandoned goods, ‘What happens to unclaimed cargo containers?’
Here, at BOXXPORT, we could give you a solution. You could put cargo containers for sale in our online marketplace. And expect to get a satisfying return from it. BOXXPORT is a digital container marketplace that helps container traders buy or sell cargo containers globally. Our digital marketplace provides real-time data from the moment you come in contact with it.