What happens when shipping containers are abandoned?
Cargo may be abandoned or unclaimed for numerous reasons, ranging from the importer being unable to clear the cargo or pay import duties to not having the correct permit. Find out the main reasons for cargo abandonment and what happens when shipping containers are abandoned by the consignee.
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When is cargo considered abandoned?
The definition of abandoned cargo by the International Federation of Freight Forwarders Associations (FIATA) is: when “the consignee [importer] has manifested no intention to take delivery… after a reasonable period”.
In some locations, such as India, cargo is considered abandoned if it is not cleared by the importer within 30 days. In China, this period extends to 60 days. In the EU and Australia, the period is 90 days. In the USA, it is six months from the date of import, although certain items, such as perishables and hazardous materials, have a shorter “reasonable period.”
Who is liable for abandoned cargo?
In most cases, the shipper is liable for the abandoned cargo. If the cargo is not cleared by the importer and the Bill of Entry is not filled out, the cargo is considered abandoned.
The Bill of Entry is the customs document to be filed for import clearance. From the moment a cargo arrives at the port of discharge, the importer has limited time to fill out the import documents.
It is the importer’s responsibility to track the cargo and follow up with the shipping company in the event of delays. If the importer fails to complete the necessary import clearance procedures and formalities on time, the cargo is automatically declared uncleared or abandoned.
Sometimes, the cargo is rejected by the consignee due to the low quality of goods that are being transported. To avoid cargo rejection, the consignor and consignee should discuss all requirements and provide high-quality products.
Abandoned cargo after import clearance is the liability of the buyer.
What will happen with the content of the abandoned cargo?
Abandoned cargo will lead to financial losses for at least one of the parties involved in the process. Abandoned shipping containers may become a burden to the shipping line or freight forwarder. Shipping lines cannot afford to hold containers in storage for extended periods of time.
In such cases, the shipping company will try to get rid of the cargo and avoid additional expenses. To get rid of abandoned cargo, freight companies often hold auctions to sell the goods.
When cargo is abandoned, the shipping company has a right to:
- Unpack the load from containers.
- Store the cargo in a bonded warehouse.
- Sell the cargo.
- Offset all costs incurred from the proceeds of the sale.
- Take legal action to recover the difference between the sale price and the costs incurred.
What happens to abandoned shipping containers?
When a cargo container is abandoned, the shipping line or freight forwarder can decide to sell the cargo by public or private auction if they are named as the “principal” and not “agent” in the Master Bill of Lading (MBL) and, therefore, liable for any expenses. This procedure is known as “right of lien”. In other words, they are exercising the right to keep the cargo until the debt is paid by the shipper.
The auction is organised by freight customs officials, who allow the general public to view the goods and vehicles in advance. They also announce the abandoned cargo auction date in the print and broadcasting media.
The proceeds go towards settling the cargo, storage, duties, transport, and auction bills, along with any other related costs. However, if the proceeds of the auction do not cover the costs incurred by the shipping company, then there is a provision in international law for action to be taken against the shipper.
The list of goods and vehicles to be sold are available in different customs centres. Usually, customs authorities do not guarantee the condition, quality or quantity of the goods sold at the abandoned cargo auctions.
Who pays for the storage of the abandoned cargo?
If the vessel is held up at the terminal or port after the free time has expired, the shipper has to pay demurrage charges. Usually, the demurrage fee increases the longer the cargo is kept at the terminal.
The dispute between the shipper and the shipping line or freight forwarder may last a considerable time, leading to a high demurrage charge. This is the reason why many shippers decide to abandon the shipping container and their cargo instead of paying the demurrage fees.
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What causes demurrage charges for abandoned cargo?
Demurrage charges or penalties may apply to the contracting parties if they:
- Fail to load and unload the vessel within a specific time frame;
- Return the containers later than agreed;
- Provide incorrect or incomplete documentation or fail to provide it.
The cargo stays at the terminal for free during the agreed period. After that, the cargo must be moved out, or additional charges will apply. Many times, when faced with the obligation to pay additional charges, the buyer decides to abandon the cargo.
If it is agreed that the shipment may proceed further to another port, it will first be dispatched. Shipping dispatch means that the cargo is ready to move forward to the designated destination.
What are the reasons for cargo abandonment?
There could be multiple reasons for a cargo to be abandoned. The most common are:
- The cargo is not cleared by the importer.
- The receiver does not have an import permit or licence.
- The importer cannot pay the import duties and demurrage charges.
- The buyer is not satisfied with the quality of the goods.
- The shipment was delayed, and the cargo is no longer needed.
- The shipment is damaged.
- Disputes between shippers and consignees
What are the reasons for cargo delays?
Shipping goods may take more time than planned due to many reasons:
- The most common is the weather, as it influences almost all means of transport. Extremely bad weather conditions may require additional time for delivery, resulting in higher costs. It may increase the freight transit time by 1-2 weeks in some cases.
- Some technical malfunctions of the vehicle or vessel may delay the delivery, albeit usually not for long.
- Problems at customs. If the authorities detect an import violation, your cargo may be delayed or seized. Make sure you have all your shipping documents in order.
- Shipping during peak seasons may also result in cargo delays. Try to avoid shipping time-sensitive cargo during busy carrier seasons such as Christmas. Sometimes, cargo is abandoned because the transit time is too long and the shipment is not needed anymore. If it is crucial for the consignee to receive the goods by a certain date, a delay in the delivery could be a reason for declining or abandoning the shipment.
Does Eurosender offer container shipping services?
Currently, Eurosender does not specialise in shipping containers, but our team of specialists can create a tailored offer based on your requirements.
We offer logistics services for individuals, start-ups, as well as small and medium-sized business shippers. Check the range of logistics solutions we offer for additional information.
Interested in learning more about pallet and freight shipping? Check all our articles about pallet deliveries.