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Consignee

Consignee: The Ultimate FAQ Guide

If you’re importing from China or shipping from China, most probably you have come across the freight term consignee.

Remember, correct use of terms will save you the unnecessary cost that comes with a misunderstanding of freight terms.

That’s why today I will answer all questions you have about the consignee.

Let’s dive right in.

What is Consignee?

The recipient of the goods being shipped is the consignee.

This can either be the buyer or the agent of the goods being shipped.

Their details must appear on the bill of lading.

What is Consignment?

Consignment is the act of issuing over to another person care or custody of material or goods while still retaining the legal ownership.

The ownership of the goods is ceased once the goods are sold.

Consignment can be done in order to ship the commodities, transfer goods to an auction or place the goods on sale in a given store.

 consignment

consignment

Is Consignee the Shipper or Receiver?

The receiver of the goods being shipped is the one referred to as the consignee.

In this case, it is the consignee who will be the receiver since they are the ones to whom goods will be delivered to.

The details of the person or agent to receive should be entered on the ‘consignee’ field when filling the forms.

Can Shipper and Consignee be the same?

The answer can be “yes” and “no.”

The two parties can be the same.

This can happen if one company has a branch in another country.

Since the name of the company is one, the name will appear both on the shipper and the consignee.

The shipper’s address and the consignee’s address will however be different since the locations are different.

Another instance where the shipper and the consignee can be the same is where one party is involved.

This is to say, the buyer buys their goods and sends them to him/her in their own country.

The names will be the same.

The addresses will however be different since the place at which the shipper is sending the goods, is different from where they will pick the consignment.

What is the difference between Consignee and Consignor?

Both the consignee and consignor are common terms used in the trading as well as the transport sector.

In a consignment, the one receiving the goods is referred to as the consignee.

The consignee is only a receiver but not the owner of the goods.

Once the consignee undertakes to pay the consignor the full amount for the shipped goods, then the ownership is transferred.

In many cases, a consignee happens to be an agent to receive goods from the consignor.

The person receiving goods will always be the consignee no matter the circumstances.

Whether the receiver is the buyer, the agent, or even an agent who intends to receive goods and sell them later.

This does not concern the carrier as they will enter their name as the consignee in all documents pertaining to that consignment.

When goods are being sent by the producer or the manufacturer, they are sent as a consignment.

The sender of the consignment in this case is referred to as the consignor.

Their name as the sender will be entered in all official documents by the consignor.

consignee

consignor and consignee

What are the Duties of Consignee in International Shipments?

The duties of a consignee are generally payment of duties as well as covering any charges that accumulate on top of them.

It is upon the consignee to ensure that the goods are in good order as illustrated in the bill of lading.

They will inspect the shipment to ensure that there will be no broken or missing items once the cargo arrives.

In case the items are found to be over, short and damaged (OS&D), it is upon the consignee to immediately file a claim with the carrier.

They will be required to carry the request for reimbursement or the incorrect shipment be removed.

After the consignee has signed all the required documents, they take over the responsibility and the ownership of goods.

To this extent, the carrier will have nothing to do with the shipment, excluding any duties relating to transmission of paperwork or returning the items to headquarters.

Who Does a Consignee Interact with During Shipping?

A consignee is part of a large team of contracts that must work together in harmony for a shipment to be complete.

Below are some of the people other than the consignee must interact with when the shipment is being processed:

  • Consignor: This is the sender who is in control of releasing items from a warehouse to the destination.

He puts the bill of lading together as well as ensuring that items are in the best condition before getting to their destination.

  • Carrier: A carrier is in charge of delivering items to their destination.

This can be an independent owner-operator or someone who is working with a large fleet.

He is also in charge of receiving the bill of lading as well as transiting the goods to the consignee safely.

  • Notify party: Sometimes the consignee may not be able to physically inspect as well as receiving all the shipments.

At this point, notify party which is responsible for receiving notification once a shipment gets to its destination come into play.

The notifying party will arrange customs clearance in case of an international shipment.

notify party

notify party

  • OS&D Clerk: Large shipping companies may sometimes employ a dedicated clerk for over, short, and damaged.

The OS&D clerk is in charge of receiving, inspecting and managing claims.

They typically work out of the consignor’s warehouse together with the other members of the shipping department.

Why is Consignee Important in International Shipping?

The consignee is important in any shipping transaction.

This is simply the customer-the individual whom the carrier must please in order to receive the compensation.

Customer experience is everything.

The shipping company must therefore please the consignee as he forms part of the most important business metrics.

The consignee has the power to take the business somewhere else if they are not happy with the services.

Businesses will therefore need to go beyond keeping the consignee happy in all transactions.

It is for this reason that the fleet managers are required to be in direct contact with the consignee or the team during the whole process.

The company should provide all updates regarding shipping to create a strong customer experience.

During Shipping, Does the Carrier have to Listen to the Consignee?

Sometimes consignees can be hard to work with and they may have excess demands.

If the carrier finds it hard to work with the consignee, they may choose not to listen to them by sticking to the words of the bill of lading.

In case of a dispute, it should be handled by the management back at the warehouse.

The carrier should not negotiate with the consignee as this will violate the contract terms.

It may result in a complicated legal situation.

Is Consignee the same as Delivery Address?

The Bill of lading form will have both the consignee and deliver-to fields.

The two may look similar but they are not the same when there is an export.

The consignee will be the customer’s ship-to address.

A delivery address will be indicated as the physical location where the goods will be delivered.

example of delivery adress

example of a delivery address

 The consignee address may be different depending on who will receive the goods.

What is Third Party Consignee?

This is a service for clients who may not want to reveal the real commercial value of a shipment to the consignee.

With this service, you are allowed to ship goods to consignees without attaching a commercial invoice.

This allows for faster shipments and eliminates additional handling and warehouse costs at the destination.

3rd party consignee

3rd party consignee

Is Consignee the Importer of Record in Shipping?

Consignee is not the Importer of Record.

A consignee can assume the duties of an Importer of Record (IOR) but this can only serve the interests of an individual or the company.

Professional Importer of Record facilitates the import of shipments for any client who has no connections in the destination country.

How do I tell my Supplier who the Consignee for my Shipment is?

The consignee will be the party who will end up with the ownership of goods once the cargo gets released at the final destination.

For example, if you have a registered business in the U.S and you intend to ship to Amazon, you will be the consignee.

Therefore, ownership of goods will be transferred to you once the cargo gets to its final destination.

What is the Role of a Consignee on a Bill of Lading Shipping?

The consignee in a bill of lading is very important.

They are the receiving party for the shipment and their details must be clearly and correctly captured on the Bill of lading.

They are responsible for the collection and verification of the goods.

 bill of landing in shipping

bill of landing in shipping

Who keeps the Bill of Lading between Shipper, Consignee, and Buyer?

The Bill of Lading gives ultimate control of the shipment to different parties along the route

As such, the Bill of lading can be kept by the shipper, buyer, or even the consignee.

If a carrier or shipper has not been paid the full amount of money for transport services, then they can keep the bill of lading.

They can hold it until such a time that the payment for the shipment is paid for before they can release the bill of lading.

If the goods are being delivered to the consignee, the bill of lading will be transferred to the consignee.

This is what they will use to collect the shipment.

There are several types of bill of lading. They include but not limited to:

  • Straight
  • Shipper’s order
  • Air Waybill
  • Originals
  • Inland
  • combined /Multimodal transport
  • Through
  • Switch

How Do you Make an E-waybill if Buyer and Consignee are Different?

When transferring goods to a different location of the same buyer, you will only be required to generate one e-way bill.

In a situation where the addresses are different along with the buyer and taking delivery of the same, you will be required to generate two e-waybills.

Generating two e-way bills was brought having in mind instances where the delivery location is located in a different state away from the buyer’s state.

This is done in order to complete the transaction and taxes cycle that changes with inter-state transactions.

an e way bill system

an e way bill system

How Do I Change the Consignee on a Bill of Lading Document?

The supplier may realize a discrepancy in the consignee’s bill of lading after releasing the Bill of Lading by the carrier.

If the discrepancy is realized before the documents are submitted to the supplier’s bank, changes can be effected through the submission of all originals with the vessel owner’s agent.

Also, at load port who issued the Bill of Landing or with the supplier’s bank.

The freight forwarder carrying the goods can be able to amend the consignee named in the bill of lading for the export shipping documents that are authorized by customs authorities.

If the name of the consignee to be amended was not indicated in the export shipping documents, the carrier is not permitted to amend it.

In such a situation, the exporter or his customs broker will be required to amend the consignee named in the shipping documents with the customs.

They can then approach the carrier for amendment of the consignee’s name on the Bill of Lading.

How Do you Build Trust with Your Consignee?

Below are some of the factors you need if you want to build a trustful relationship with your consignee:

  • Settling on the responsibilities of incoterms
  • Protecting the goods through Insurance
  • Duty of storage-Convince the consignee to pay for proper storage fees to avoid losses.
  • Buy out and stock rotation: It is your responsibility as the consignee to sell off the goods.

Are all Consignees Buyers?

The answer is yes.

It can be that a consignee has signed a contract with the seller or the original consignee has transferred the rights of ownership for the goods being shipped to a new party.

The new party will then become the rightful owner of the goods.

What is a Shipping Bill?

A shipping Bill is a document required by the customs authorities in order to clear the goods.

example of a shipping bill

example of a shipping bill

Is Notify Party and Consignee the same?

Normally the notifying party and the consignee will be the same.

On other occasions, the two will be different parties.

The notify party can be the clearing agent, the consignee, or even a third party with a promise of goods by the buyer or consignee.

Why do I need a Notify Party During International Shipping?

When shipping internationally, you will need a notify party to be notified on the arrival of a consignment.

They will be arranging for the formalities of the consignment.

Notify party understands the custom laws of the destination and will therefore handle everything.

Also ensuring your consignment follows the required procedures in order to comply with all laws.

Who is the Consignee if Shipping to a 3rd Party Like Amazon?

Whenever you are shipping to a 3rd party like Amazon, or when your goods will stop at an inspection center before going to the final destination.

The inspecting or 3rd party like Amazon will not be the consignee.

The consignee will be the importer.

Is the Consignee Responsible for Freight Charges if Shipping EXW or FOB?

The consignee is the importer.

When you are shipping EXW or FOB, it is the responsibility of the consignee to handle the freight charges once the consignment is handed over to the consignor by the forwarder.

What is an Ultimate Consignee?

The ultimate consignee will be the intended recipient of the imported goods sold by the shipper.

In most cases, the consignee will be the same party as the ultimate consignee.

U.S businesses will have to act as the ultimate consignee for the foreign importer.

What are the Considerations for Appointing a Consignee?

Before appointing a consignee, make sure they have the following:

  • They must have an EORI number for their business
  • Their business must be VAT compliant

If they do make any taxable transactions in the country of import, they must have a VAT in that country.

The EORI and VAT number will be linked and will be used by your carrier in the customs documentation on the section for the consignee.

What are the Possible Issues of Working with a Consignee?

Many challenges may occur when using a consignee.

They include:

  • You will receive revenue that is much less compared to if you had sold directly to the end-user. Working with a consignee will reduce the revenue that you could have earned.
  • The ownership and the risk will be retained and any goods that are not sold will be returned at no cost on the side of the consignee.
  • The goods that are on consignment may not get enough promotion or exposure by consignees.

How Much do Consignees Earn?

Consignees earn based on the percentages.

The rates are agreed and stated in written consignment agreements and signed by both the consignor and consignee.

The commission charged is subjective and will depend on:

  • How adept the management of the store is in getting the highest prices for the goods

The overhead costs for the store.

Also, the store must charge enough to cater to its cost and make profits as well.

  • The relationship that exists between the consignee and consignor- They may be neighbors, friends or even relatives who call for some discounts.
  • The total value of every item- Some of the high-end items like Porsche might call for large splits among consignors than other items.
  • The locale and clientele-Wealthy people may not be so much concerned about their share of sales compared to clients at the bottom of the spectrum. who may hope to turn their merchandise into the much-needed dollars.

Some of the percentages that consignee charges are:

  • Clothing items at 40-60%
  • Furniture goods 50-70%
  • High-end goods: 80-90%
  • Mall Vendor Goods: 80-90%
  • Sporting items: 50-70%
  • Vehicles/Automotive: 70-80%

What Does ‘Gouging the Consignee’ Mean in Shipping?

This is a situation where the agents for the carriers, the agents for the port, and even agents of the CHB may pass extra costs belonging to them.

These are their costs involving the customization of a shipment that was not initially rubber-stampable.

They charge for items such as transfer charges, collection charges, processing charges, notification charges, or anything they can charge.

It cannot be agreed whether these actions truly mean gouging the consignee or covering their costs which may be caused by the shipment challenges or even a “slow” consignee.

Can a Shipment have Multiple Consignees?

A shipment can have multiple consignees.

For instance, if a freight forwarder acts as the intermediary and steps to complete the delivery of the goods will be an intermediate consignee.

There can also be the ultimate consignee who acts as the final recipient of the goods.

For cross-border transactions, the importer of records was considered as the ultimate consignee.

They will be considered as the owners of the goods for purposes of declaring customs as well as payment of taxes and duties.

What Happens if a Consignee is not Available During Shipment Delivery?

At times the consignee may not be available when the shipment arrives at the port of destination.

It can happen if the importer did not receive the Cargo Arrival Notice from the carrier.

Depending on the situation, immobile shipping containers can lead to financial losses.

The containers will become a burden to the freight forwarder or the shipping line.

Since they cannot hold them for a long time, they will need to get rid of them to avoid additional expenses.

In most cases, the company gets rid of the cargo by holding auctions to sell the goods.

Once the cargo has been abandoned, the shipping company will have the right to:

  • Unpack and remove the goods from the container
  • Taking the cargo and storing it in a bonded store
  • Selling the cargo
  • Recovering any costs incurred from the money they get after the sale
  • Taking legal action in order to recover any remaining amount that couldn’t be recovered after the sale.

How Do I Find a Consignee who will Receive the Cargo on My Behalf?

You will first need to find out who is the Ultimate consignee as per the customs and border protection definition.

Once you have that, look out for their identification number.

Once the merchandise is bought from the seller, the ultimate consignee becomes the buyer.

Find out if by the time the shipment was getting into the United States had not been bought.

If so, then the ultimate consignee will be the individual or entity which was consigned the goods by the shipper.

If the ultimate consignee is one individual, contact them and request their social security number.

You will use this as the consignee number.

You can also do this if it is an organization.

If you find it convenient enough, you may obtain Employer Identification Numbers from the online database of the Securities and Exchange Commission.

If shipping to the US, can I appoint a Foreign Consignee Without a Social Security Number?

When you are shipping to the U.S and you need a foreign consignee, sometimes they may not have a Social Security Number.

In such a case, they can use their passport number, their country where they got the passport and the date of birth.

This will be accepted and they will be able to act as your consignee.

What Does ‘Consigned to Order’ mean in Shipping?

‘Consignee to Order’ is taken to mean that the BOL was consigned as the order of the shipper.

It means the shipper will decide on who is supposed to collect the shipment once it gets to the port discharge.

They should give the carrier at least one original copy for the shipment to be released.

The endorsement is the one that helps the shipper to make this determination.

It is different from ‘Blank endorsement’ in that the person having the original bill of landing cannot claim the shipment from the carrier once they arrive at the port of discharge.

What does ‘Container to Consignee’ mean?

This is a shipping term that can be applied during the handling of cargo whenever the carrier hands over the shipment to the consignee.

This takes place either by loading the consignment from the warehouse or by discharging the consignment from the port directly to the consignee’s transport means.

The term can also be used whenever the carrier is handing the loaded container of goods to the consignee at the port of discharge.

This happens when the container gets loaded from the warehouse to the means of transport being used by the consignee.

When using this term, the ‘container’ will also be taken to mean any large units of the load.

What Does Consignee Billing Mean in International Freight?

Consignee billing is an agreement in form of a contract where the receiver of the gods pays for their shipping charges.

This includes oversize as well as the DIM weight.

The receiver is also obligated to pay for any additional handling fees that may be charged.

All other charges are paid for by the shipper.

Now, I would like to hear from you – If you have any questions or inquiries about this shipping from China, contact Bansar now.

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