CONSIGNEE GUIDELINES - Missionary Expediters

CONSIGNEE GUIDELINES
Consignees, or receivers, are presented with the tasks to take possession of the cargo
from the point of delivery. To minimize costs, the tasks must be done quickly, without
hang-ups, and with minimal taxes/duties.
From the outset, Missionary Expediters suggests to all consignees: “chase after the cargo-do not wait for the cargo to chase after you.”
To help ensure the consignee is prepared for and understands these tasks, we at
Missionary Expediters recommend that the exporter confirm that the consignee/receiver
has a local budget (hence, plans) each of four tasks.
1. Clear through customs.
2. Receive the container from the carrier.
3. Deliver the container to his door. And, to add another task…
4. Coordinate the above three functions.
These four tasks serve as a framework to discuss the consignee’s objective. Further, the
consignee’s activities and costs can be viewed in terms of what is normal and usual,
versus what is extraordinary and bad. First, the normal and usual.
NORMAL AND USUAL
Here, the three tasks are described presuming the process is “rubber-stamped” through
Customs (rubber-stamped is the objective).
Task 1: Clear through customs
This process is the control a nation has over what enters its sovereignty and to earn
money. It is convenient to think of this process as one you would follow if a box came to
your front door. Before allowing the delivery-man to bring it into your house, you’d ask:
How come? What is it? Is it worth anything? How much benefit is it to me? Is it
safe? Will my spouse permit this?
So it is with customs. In the same order, the consignee would present:
• How did it come? Bill of lading (BL)
• What is it? Pack List
• Is it worth anything? Declaration of Value /Invoice, supplemented by a Letter of
Donation
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• How much benefit is it to me? The duties and taxes entry
• Is it safe? Health certificate, like Phyto-sanitary Certificates, Fumigation Certificate,
Certificate of Analysis; Quality Statement, Haz Mat Statement, and the like, even
if a requirement seems crazy.
• Can this be imported? Forms required by the destination country (sometimes must be
purchased); Import Permits. Some countries require these documents to be
legalized, authenticated, or “consularized” at the origin. Some countries require
the cargo be inspected either physically, or by its documents, before it leaves its
origin. Some countries require the packing list to indicate harmonized codes.
These shipping documents are normally sent by courier to the consignee. The
consignee hopefully already has set up his organization with appropriate legal
status, perhaps even a duty-free status. The consignee should have obtained,
perhaps at a fee, any required import permits or licenses. The consignee or his
agent will also complete local customs forms, which may have to be purchased.
Basis all these forms duties /taxes are calculated.
Sometimes, on a random sample basis, or for reason of policy, or for reason of anything
suspicious, like inconsistency in the documentation, customs officials require the cargo
itself be examined. If so, the costs of inspection is chargeable to the consignee, including
drayage and cargo handling, and recouperage (repairing any disarray from the
inspection).
When the duties, taxes, and costs are paid, customs release is thereby obtained.
Missionary Expediters always recommends “pre-wiring” to get this process done early, or
identify the problems early, be it lack of an appropriate permit, incomplete or inaccurate
cargo descriptions, missing documents, too high a duty, and so forth.
Task 2: Receive the container from the carrier
Typically, the prepaid part of the journey ends at the destination. The point of delivery is
most often a city named on the bill of lading. More precisely it is the ‘first’ door of the
named city; and, therefore, it is normally a terminal in the city. It may be the seaport, but
also it can be an inland terminal. It is not necessarily the consignee’s door.
The consignee must claim the cargo by submitting the original bill of lading, and paying
any local port charges. A carrier release is thereby obtained.
Local port charges may have various types/names: wharfage or administration fees. Local
port charges may involve the cost of moving the container through the port area:
container service charge (CSC), or destination terminal handling charge (dTHC), or
destination and delivery charge (DDC).
These charges are typically paid by the consignee (i.e. collect), but if known, Missionary
Expediters tries to make the CSC, dTHC, or DDC prepaid (to be paid by the exporter).
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. 2a. Submitting Customs Documentation to the Carrier. Dealing with the carrier
may also involve submitting to them customs clearance documentation, which, in
addition to the bill of lading, includes the declaration of value, packing lists,
import permits, letter of donation, health certificates, harmonized codes, and other
goofy information. The carrier will stop the container at its furthest point of
“confidence” until the consignee responds and the documents look good. It’s not
that the carrier processes the cargo through the destination customs process for the
consignee; rather, the carrier wants to be “confident” that the documents seem in
order before committing the container to further onward movement and costs.
Also, the carrier may need these documents to conduct in-transit (IT) customs
processing. So, for example, containers to Central Asia can be stopped in
Rotterdam or Bremerhaven until the carrier is confident the documents are “good
enough” to proceed. The carriers see little sense in bearing the cost of transit, and
then have to pay higher storage costs in Central Asia where the cargo is less
secure, if the documents indicate a probable customs delay. The in-transit customs
processing may involve fees that the countries en route want for crossing over
their land. Often called inland wharfage, these fees are typically a percentage of
the value (CIF value being most common), and some times they are ‘collect’ since
‘prepaid’ terms may not be allowed. . 2b. “Free out” Ports. Some discharge ports are “free out” ports, particularly in the
Mideast. So, rather than “liner terms”, the carriage is termed “free out”, meaning
the cost of taking the cargo out of the vessel and placing it on the wharf is NOT
covered by the ocean freight. The consignee is responsible therefor. Depending on
the port the unloading charges could be several hundred dollars or more per
container.
Missionary Expediters tries to make clear that these certain ports are “free out” so the
exporter may advise the consignee to expect to pay these costs.
Task 3: Bring the container to his own door
Once the carrier release and customs release are obtained, the cargo may go out of the
respective carrier gate and the customs gate. The consignee must then remove the
container, dray to his door, unload it, sweep it clean, and return it to the carrier in the
same condition as received within the allotted free time. If the cargo was cleared at a
place prior to its arrival at the named destination, it may be that the cargo can be brought
to the consignee’s door directly. The consignee’s door is the ‘first’ door at the named
destination. At some places the carrier will not release the equipment unless the
consignee puts down a deposit to guarantee their safe return. A lot of times getting the
deposits back is next to impossible. The consignee places the cargo in his safe and secure
warehouse. Of course, the consignee is responsible for the unloading and the
warehousing costs.
Task 4: Coordinate the above three functions
The consignee typically uses an inbound agent to conduct the three above functions.
Often named a Customs House Broker, the consignee will pay the Customs House
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Broker’s (CHB) fees, too.
Agents vary in costs and in what services they will or will not provide. Missionary
Expediters recommends consignees to "shop around" to find an agent who seems
trustworthy, responsive, dependable, knowledgeable, and reasonable in cost.
EXTRAORDINARY AND BAD
Now, it is highly desirable that all four activities above are conducted as a “rubber
stamped” process. The costs for such a process should be included in the local budget,
and Missionary Expediters always recommends the exporter confirm his consignee is
able to meet at least this local budget. Often the lack of a local budget is the very reason
the consignee cannot perform the above functions at all or on time.
Repetitive cargoes, like commercial shipments, can become rubber-stampable. The
problem is, relief cargoes are not repetitive and it’s hard to get any “practice”. So,
summarily, anything that stalls the process is a cost, and at penalty levels. Here are the
common penalties:
• Demurrage, whether the carrier or customs release is delayed. This charge is for the
extra time the equipment is tied up. Often the daily charge accelerates every
specified time period (week or month). Demurrage is applied to the container at
the terminal or to the container and chassis outside the terminal.
• Storage (quay hire), whether the carrier or customs release is delayed. This charge is
assessed by the local port or terminal authority.
• Per Diems (per day charges) is another term for demurrage and storage
• Equipment damage costs and /or cleaning charge. When removed from the terminal
the trucker, on behalf of the consignee, signs a “clean” receipt (no damage). If
returned with broken tail lights, flat tires, missing mud flaps, dirty container, etc.,
the terminal will bill the consignee through the trucker.
• Customs penalties if the cargo is not cleared within a specified time, or with improper
entry information.
• Customs seizure costs. Each country has a policy on seizure of the cargo if the cargo
is not cleared after “X” days of arrival. For example, in the USA, customs seizes
the cargo 15 days after arrival. The cost of the drayage, devanning, cargo
handling, and storage is for the account of the consignee, and the costs are
designed to be a penalty (i.e. very high). After six months the cargo is auctioned
off. It may be, however, that the seizure process is not enforced, since customs
may not wish to incur the cost of disposal if the abandoned cargo is deemed of no
market value. The carriers then auction the cargo themselves, or better yet for
them, they will chase after the exporter for costs.
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• Gouging. Then, there are agents of the carriers, of the port, even the CHB, who pass
onto the customer their extra costs for having to customize a shipment that was
not rubber-stampable. They’ll charge for items like: transfer fees, collection fees,
notification fees, processing fees, or whatever. It is debatable whether this is
simply gouging the consignee, or truly covering the cost of the nuisances caused
by a difficult shipment or a “slow” consignee.
• Gouging again. Lastly, it must frankly be pointed out that on occasion consignees
have been suspected of inflating all of the above costs and penalties because the
exporter will be willing to pay them to avoid losing the cargo that they already
invested so much in. Thus concludes the discussion of what items of cost a
consignee will face. Please bear in mind that terminology may differ place to
place. Since transportation is conducted through a network of agents, who are
themself independent businesses, the degree of control that the U.S. company has
over its agents will vary. Missionary Expediters would recommend that if a cargo
goes beyond the “rubber stamp” phase, the normal and the usual, the consignee be
instructed to scream out an alert. Our experience shows that a lackadaisical
consignee—one who doesn’t chase after the container, one who expects the
containers to chase him—is the main problem. Since this whole process is unique
to each shipment, the consignee must be willing to try, error, and adjust. And
adjust. A consignee ought to be a “wheeler-dealer.”
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