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10 tips to avoid losses caused by abandoning cargo

Posted by: Deved Shipping
Category: News

In any normal year, thousands of containers full of cargo will be discarded all over the world.

Although discarded goods may bring a lot of pressure and cause headaches for everyone involved, freight forwarders may be particularly affected by the abandonment of goods.

When to consider giving up goods…?

There are many reasons for abandoning goods, including completely legal reasons, such as bankruptcy of the consignee, differences in the quality or quantity of the goods, or other commercial differences.

This resulted in the rejection of cargo at the destination port. These rejections may be caused by changes in regulations, usually in a short period of time, prohibiting the import of certain commodities together with regulatory inspections or identifying non-compliant commodities that cannot be imported.

In addition, you may also encounter unscrupulous people using it as a means to get rid of garbage or illegal goods.

This is usually the case for low-value goods (such as used cars). In both cases, you as a freight forwarder may encounter difficulties, and under the “merchant clause” shipping line, the carrier may recover your debts.

If you directly sign a contract with a shipping company, and you are proved in the general bill of lading to be the shipper and not the “agent”, then the shipping company will be entitled to demand its demurrage, storage, destruction and other expenses. Any goods that you have not received.

Don’t think that you have no ownership of the goods or that the shipper/consignee has assured you that the goods will be released and bear these costs. Don’t think that the freight company will not adversely affect you

The owner of the goods is ultimately responsible, but you are first responsible for these costs, just as you are responsible for the customer’s goods under your care.

Since these goods usually stay at the terminal for several months, this may include a large amount of detention and demurrage. It’s not uncommon for shipping companies to ask freight forwarders like you for more than US$10,000…

Why is it so important now…?

The global economic turmoil has led to a sharp increase in the number of abandoned containers. As many consignees are unwilling or unable to receive the goods, this situation will only increase in the coming weeks and months.

Moreover, at the top of the slowdown in international trade and income, you are at risk of losing thousands of dollars! The carrier is very clear about the meaning and legal implications of dealing with this issue, so it may be prudent to issue a warning to the freight forwarder.

Disposing of discarded goods is difficult, expensive and time-consuming. Moreover, you must remember that the entire department of the shipping company is dealing with such situations.

These 10 tips will help avoid losses caused by abandoning the goods

1. All marine-related service contracts must be reviewed, and exporters must perform their obligations under conditions such as coronavirus.

2. Take precautions to avoid being called “consignor/consignee” on the master bill of lading. If you are called an “agent”, it will enable the shipper to enter into a direct contractual agreement with the transport company, which acknowledges this mutual arrangement through its booking form, e-mail or similar means. Then, the freight forwarder may not take any responsibility. In this case, if there is any, liability insurance can be invoked to cover the related expenses.

3. Freight forwarders should indicate any “force majeure” clauses in their agreements, and give priority to sending notices to customers to invoke their force majeure to relieve their right to perform their obligations.

4. Freight forwarders should always keep their customers up-to-date information to solve any problems encountered by other stakeholders in a given supply chain (such as sellers, transporters, production lines, agents, and terminals). Open communication channels help keep the state pulsating and ensure that customer losses and any execution failures are caused by things that are truly and reasonably beyond their control.

5. Let the shipper/consignee know that they cannot give up the goods without affecting the goods. As a freight forwarder, you want to pass on all the fees payable to the dedicated line to your customers, which is why you should let your customers know about all detentions and hold them accountable.

6. Keep written records of communications and send regular notices to require importers and exporters to fulfill their contractual obligations. You need to keep written records to minimize the risk of claims and prove that you have made all reasonable efforts to avoid customer losses.

7. Pay close attention to any overdue containers and expenses incurred. Keep in close contact with your customers. Signs that the consignee received the arrival notice but were not contacted within 1-2 weeks may be an early warning signal.

8. Don’t delay. In most cases, the cost can be resolved quickly before the shipper/consignee is under tremendous pressure. Remember, once the cost increases and exceeds the value of the product, merchants rarely cooperate! In this case, our best advice is to act quickly and contact the carrier, who are usually willing to reach a more commercially viable solution. At the same time, please contact the insurance company to understand the scope of insurance provided.

9. Try to load the goods and put them in a bonded warehouse to save costs. In the face of abandonment, there are three most common options: re-export the goods (which may include returning the goods to the original shipper), sell the goods to another party or destroy/donate/auction. It is important to identify a party with local knowledge to assist in handling abandoned goods.

10. The most important thing is to avoid the temptation to do anything, in the hope that the problem can be solved, and as a freight forwarder, you will also be harmed because you are not your goods.