Consignee Guidelines

We at Missionary Expediters often say that the consignee/receiver should have a local budget to do three tasks.

1. Receive the container from the carrier.
2. Clear through customs.
3. Deliver the container to his own door.

... and add another task

4. Coordinate the above three functions.

The consignees activities and costs can be viewed in terms of a) what is normal and usual, versus b) what is extraordinary and bad. The costs are underlined.

1. Normal and Usual
   
   Here, the three tasks are described presuming the process is rubber stamped through (thats the objective).
   
   
   1. Receive the container from the carrier
      
      Typically, the prepaid part of the journey ends when the container is sitting in the stack at the terminal. 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 make the CSC, dTHC, or DDC prepaid (paid by the exporter).
      
      Addenda 1
      
      Dealing with the carrier may also involve submitting to them customs clearance documentation, which, in addition to the original 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.
      
      Its 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 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 probable customs delay.
      
      The in-transit customs processing may involve fees that the countries enroute want for crossing over their land. Often called inland wharfage, these fees are typically a percent of the value, CIF value most commonly, and some times collect since prepaid terms may not be allowed.
      
      Addenda 2
      
      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 $300-$500. a 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.
   2. 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 in your house, youd ask:
      
      
      • How come?
      • What is it?
      • Is it worth anything?
      • How much benefit is it to me?
      • Is it safe?
      • Will my wife permit this?

      So it is with customs. In the same order, the consignee would present:
      
      

      • Bill of Lading
      • Pack List
      • Declaration of Value/Invoice, supplemented by a Letter of Donation
      • The duties and taxes entry
      • Health certificate, like Phytosanitary Certificates, Fumigation Certificate, Certificate of Analysis; Quality Statement, Haz Mat Statement, and the like, even if a requirement seems crazy.
      • Forms required by the destination country (sometimes must be purchased); Import Permits

      Some countries require these documents to be legalized, authenticated, or consularized here at the origin. Some countries require the cargo be inspected either physically, or by its documents, before shipment. Some countries require the packing list 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 drayages and cargo handling, and recooperage (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.

   3. Bring the container to his own door
      
      If (a big if) the carrier release and customs release are obtained within the allotted free time, 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.
      
      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.
   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 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.

2. 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 its 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, in behalf of the consignee, signs a clean receipt (no damage). If returned with broken tail lights, flat tires, missing mudflaps, 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.
   • 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 customized a shipment that was not rubber stampable. Theyll 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 themselves 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 laxadaisical consignee, one who doesnt 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.