When shipping goods overseas or when importing, knowing the basic logistics terms, such as consignee, and their legal implications is vital for smooth and worry-free cargo transports.
What Is A Consignee?
In shipping, a consignee is the designated recipient, often the owner, of goods being shipped, as listed in the Bill of Lading (BOL). It can be a person or an entity. Unless otherwise instructed, the consignee is liable for paying import duties and is legally required to be present to accept the shipment.
What Are The Responsibilities Of A Consignee?
The responsibilities of the consignee for every shipment are detailed in the shipping agreement.
However, the role of a consignee includes some typical responsibilities:
Receive The Goods
In shipping, the consignee is responsible for receiving the goods at the location specified in the BOL.
Inspect The Goods
The consignee must make sure that the goods have arrived in good condition and match the description in the shipping documents.
Notify The Carrier Of Damages Or Loss
In case of loss or damage during transportation, the consignee must notify the carrier.
Sign For Receipt Of Goods
After inspecting the goods, the consignee is the person or legal entity that must sign for the receipt of goods.
Pay Duties, Taxes & Fees
In international shipping, the consignee is legally bound to pay any import duties, customs clearance fees, or other import charges.
Why Not Use The Term Recipient Or Receiver?
Because supply chains are intricate systems and purchases rarely happen directly between the supplier and the end receiver, the term “consignee” in shipping is a more accurate description.
This is because goods are, in fact, consigned to a freight carrier for transport to the ultimate consignee – who is not always the final receiver.
For example, goods can be consigned to a reseller or a distributor who has the right to disclose their end customers. So, in this scenario, the ultimate consignee is not the actual receiver, as they are distributing the goods to other merchants or distributors.
As a result, ‘consignee’ is a more accurate term used in the Bill of Lading to describe all kinds of shipping scenarios.
Consignor Vs. Consignee
Simply put, the consignor is the sender of a consignment (AKA shipment), and the consignee is the legal receiver of the consignment.
The consignee may be a buyer or just an agent who acts on their behalf. The ownership of the goods or the consignment remains with the consignor until the goods have been paid for in full by the consignee.
The legal and financial responsibilities for the consignor and the consignee of a particular shipment abroad are set by the Incoterms and payment terms, and details are included in the Bill of Lading.
Shipper Vs. Consignee
The term shipper is quite self-explanatory. It is the person or entity (like a factory or a distribution center) that ships the goods, as defined in the shipping agreement.
A Shipper Isn’t Always The Consignor
Though the two terms are often used interchangeably, and in most cases, the shipper is also the consignee, this is not always the case.
Technically, the shipper is the one who consolidates and sends the goods.
But there are cases where, for instance, the consignor sells products they don’t have, transfer their ownership (i.e., consign them) to their customer through a warehouse or other entity at the point of origin (AKA the shipper) so that they can be delivered to their customer (the consignee).
So, oftentimes, on shipper-generated BOLs, you’ll see different fields for ‘sold to’ and ‘ship to’.
Notify Party Vs. Consignee
In contrast to the consignee, the notify party does not receive the goods, neither are they responsible for ensuring their quality.
However, those appointed as a Notify Party on a Bill of Lading, Sea Waybill, or Air Waybill, must be notified when a shipment arrives at its destination. Notified Parties may also be responsible for arranging customs clearance.
A Notified Party in a shipment can be the buyer or consignee themselves but also a freight forwarder, customs broker, or other shipping agent.
What Are The Different Types Of Consignees?
In practice, the appointed consignee in a shipment is the person/entity legally entitled to receive and inspect a load and pay the duties of imported goods. For legal purposes, the actual consignee of a shipping arrangement is called the Ultimate Consignee.
In some cases, there can be other parties involved in temporarily receiving and holding the goods before they arrive at the Ultimate Consignee. They are called Intermediate Consignees.
Intermediate Consignee
According to the US Code Of Federal Regulations (CFR), an intermediate consignee (bank, forwarding agent, or other person) acts as an agent who takes possession of the items for the purpose of delivering them to the ultimate consignee (15 CFR 748.5).
Ultimate Consignee
In international shipping, the Ultimate Consignee is the principal party (person, party, or designee) in interest that receives the exported or re-exported items.
When the Ultimate Consignee and the end user are different entities and in different countries, various intricacies are at play.
For instance, the foreign buyer (e.g., a reseller or distributor) may disclose the name and country of the end user for competitive reasons.
In this case, the US consignor (or U.S. Principal Party in Interest – USPPI) reports the foreign buyer as the Ultimate Consignee and uses their address to define the Country of Ultimate Destination.
However, the US consignor here is aware of the foreign buyer’s intent and business practice to resell/distribute the goods.
Navigating Supply Chain Intricacies
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