Every year, hundreds of thousands of containers loaded with cargo are abandoned at ports worldwide. The phenomenon of abandoned goods is not new. But it has become a bigger headache for the logistics industry in the current Covid-19 environment, contributing to port congestion and rising logistics costs.
In this piece, we take a look at the problem abandoned goods pose to shipping lines, freight forwarders and ports as well as to you – the exporter/importer. Read on to find out:
The International Federation of Freight Forwarders Associations (FIATA) defines abandoned goods as those “the consignee [importer] has manifested no intention to take delivery of after a reasonable period”. This includes situations where the importer cannot be identified or contacted or has refused collection.
But what FIATA calls a “reasonable period” differs from country to country. In India, goods “not cleared, warehoused or transhipped within 30 days after unloading” are considered abandoned under Section 48 of the Customs Act, 1962. In China, this period extends to 60 days. In the European Union and Australia, it is 90 days. And in the US, it is six months from the date of importation – though special merchandise (perishables, spirits, hazardous material, etc) invites a shorter, unspecified period of time.
Common reasons why an importer might not collect the goods they ordered:
Abandoned goods are dealt with in one of the following ways:
More often than not, abandoned goods take the auction route. The shipping line – or the freight forwarder, if they are named as the “principal” in the Master Bill of Lading (MBL) and, hence, liable for any expenses – can request customs to have the goods sold. The auction is organised by customs. The proceeds go towards settling the freight, storage, import duty, transportation and auction bill along with any other related charges. If the proceeds aren’t enough, the shipping line can claim the balance from the shipper and/or take legal action against them. If any money is left over from the auction, it is refunded to the shipper, failing which it might go to the state treasury.
A step-by-step guide to how abandoned goods are auctioned in India:
Right of lien: Along with liability, shipping lines and freight forwarders have a right of lien over abandoned cargo. Lien is “the right to keep someone’s property until a debt is paid”. They can enforce this right “in a reasonable manner” – such as a customs-approved auction – to recover the amount owed to them and the cost of recovering that due.
The coronavirus pandemic and lockdowns imposed by countries dealt a body blow to the shipping industry. As businesses and economies tanked, shipping lines faced record booking cancellations and cancelled record sailings. Abandoned cargo also piled up at ports. A significant section of containers stranded at ports and terminals due to mobility restrictions, border closures and labour shortages ended up being abandoned. Why did this happen?
Shipping lines and freight forwarders can save themselves a lot of trouble with these preventive steps:
Even with these precautions, it is sometimes impossible to avoid being saddled with abandoned goods. Here’s how to effectively deal with such a troublesome situation:
With the pandemic still raging, lockdowns still a reality and economies still in the red, the abandoned cargo crisis isn’t going away any time soon. For now, preventive action seems to be the only safeguard against it.
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