There are numerous parties often involved in the entire freight process with varied responsibilities.
It doesn’t matter whether you are moving overseas or shipping your merchandise with FCL or LCL shipping.
To guarantee that nothing goes wrong along the way, it is vital to understand the process and roles of each party.
In this guide, we will discuss several aspects revolving around a consignee in the shipping world.
Ultimately, you’ll know what it takes to be a consignee as well as the roles and responsibilities of this party in the freight process.
- Meaning of Consignee in Shipping Terms
- Role of Consignee in Bill of Lading
- Who does a Consignee Interact with?
- Difference Between a Consignee and Notify Party on Bill of Lading
- Is the Consignee and Shipper the Same Party?
- Can a Freight Forwarder be a Consignee?
- Basic Principles Governing Consignee in Shipping Business
- Import Documents for a Consignee in Customs Clearance Process
- What makes the Consignee an Important Party in Shipping
- How to Improve Consignee Efficiency and Experience
Meaning of Consignee in Shipping Terms
Consignee refers to the entity or party to whom ownership of goods transfers to when the cargo is released at the destination.
You can also describe a consignee as the importer of record for your consignment.
In simple terms, a consignee is a party financially responsible for the receipt of the shipment.
In most cases, but not always, the consignee is the same as the receiver.
A consignee may be an individual or a company.
You, as the buyer of the commodities from overseas or the person who placed the order, can also be the consignee.
You may also have a representative to receive the goods once they arrive at the final destination.
In many instances, it is always a requirement that the consignee is listed on the Bill of Lading.
Quite often, the carrier will always find it difficult to complete the delivery without the consignee’s or authorized representative’s approval.
Thus, the party listed as the consignee on this document must always be physically present to collect the goods.
The only exception, in this case, is when it is clearly outlined as otherwise in the bill of lading.
Role of Consignee in Bill of Lading
A consignee plays several critical roles in the bill of lading and the entire shipping process of goods.
Once the goods are imported and get to the final destination, they are cleared through customs.
At this point, the consignee assumes ownership of the landed shipment.
Technically, a consignee is responsible for paying import duties and taxes in a simple import-export transaction.
Bill of lading
The other role of a consignee is to pay any additional freight charges.
Often, the seller may choose to pay part of the freight charges or not pay, depending on the agreement the two parties had.
In such instances, it becomes the responsibility of the consignee to pay for any additional freight charges.
The other role of a consignee is making sure the items received are in mint condition as outlined in the bill of lading.
In essence, the consignee inspects the shipment to determine if there are any missing or broken items when the cargo arrives.
In case the consignee finds a short-landing, over-landing, or damaged item, he will file a claim immediately with the carrier.
The carrier will then be responsible for carrying the request for reimbursement or removal of the incorrect consignment.
Importantly, the consignee is responsible for signing all the necessary receiving documents.
And once this happens, they earn the full responsibility and ownership of goods.
At this point, any obligation of the carrier ends, excluding the responsibility related to transmitting paperwork.
The other exception would be the obligation of returning the items to the seller.
Who does a Consignee Interact with?
A consignee is a critical party in the shipping process.
However, this party is only part of the broader team of officials that must work together to complete the shipment process.
Some other parties the consignee will always interact with when facilitating the shipment process include the following;
This refers to the sender responsible for dispatching the goods from a warehouse to their respective destination.
Consignor is the party that compiles the bill of lading together and issues it to the carrier.
This party is also responsible for ensuring the goods are in proper condition before they are dispatched to their final destination.
This refers to the party responsible for delivering goods to their respective destination.
In most cases, a carrier can either be an independent provider or a company with a large fleet.
The other responsibility of a carrier in the shipping process is to receive the bill of lading.
They are also under the obligation of making sure the consignment are safely delivered in good condition to the consignee.
3. Notify Party
This refers to the entity responsible for receiving notification the moment the cargo arrives at its destination.
In some instances, such as in a busy warehouse shipment, a consignee will hardly receive and inspect the cargo physically.
Now, this is the instance the notify party comes into play.
This party is also responsible for arranging customs clearance for all international shipments.
4. OS & D Official
This refers to an individual whose role is to receive, inspect, and manage all claims.
Most relatively large shipping companies employ an OS & D official to focus on Over, Short, and Damaged (OS & D) item claims.
Typically, the OS & D official always works out of the consignor’s warehouse or premises together with other staff of the shipping department.
Difference Between a Consignee and Notify Party on Bill of Lading
In some incidences, it can be easy to confuse a consignee with a notify party.
In simplest terms, a consignee is a person or entity entitled to deliver goods according to the carriage contract outlined on the Bill of Lading.
On the other hand, the notifying party is an individual that should be notified by the carrier and consignee once the shipment gets to the port of discharge.
The two parties play different roles in the overall shipping process on the following grounds;
· Goods Delivery
Carriers deliver goods to the stated entity or individual on the bill of lading.
However, the notified party can hardly claim items from the carrier, particular under ocean shipments
· Title of Goods
The consignee field determines the delivery method for the title of goods from the shipper to the respective consignee.
By contrast, the notifying party does not have any connection with the title of goods.
· Optional versus Mandatory Fields
The consignee field on Bill of Lading is usually mandatory and must be completed on all occasions.
On the other hand, you can use notify party as an optional field; hence need not to be completed on all occasions.
· Single Versus Multiple Entries
You can only enter a single entity on the consignee field on the bill of lading.
However, under the notify party field, it is possible to enter multiple company names.
Is the Consignee and Shipper the Same Party?
It depends on several underlying factors.
On a bill of lading, the consignee and the shipper can be the same party.
There are two instances where such sort of things tend to happen frequently;
In one instance, it involves a company with two entities in different countries.
Therefore, in this case, the shipper and the consignee can be the same party.
The other instance in which these two parties can be the same is when the customer buys the merchandise in the country of origin.
In this case, you have to be based in the country of origin and ship the product to yourself in the country of destination.
This way, you become the shipper and the consignee at the same time.
In strict terms, the shipper is the contracting party in the bill of lading.
The consignee, on the other hand, is the recipient of the merchandise.
In these two outlined circumstances, both the shipper and the consignee are the same party.
Can a Freight Forwarder be a Consignee?
Freight forwarder refers to an individual or corporation in charge of organizing goods on behalf of seller or buyer.
The consignee is the party that is supposed to receive the shipment once it is delivered at its respective destination.
Therefore, it can be difficult for a freight forwarder to facilitate transportation of the shipment and double up as the consignee.
What happens is that the freight forwarder can take up all the legal liabilities of acting like a carrier but not necessarily a consignee.
Basic Principles Governing Consignee in Shipping Business
This is a subject, which lies in the specific person you booked the cargo through.
Booking your consignment through a specific agent or company without involving a third party becomes easier to pursue the entity directly.
A forwarder can issue their in-house Bill of Lading, which constitutes a legal document.
Often, the freight forwarder is usually responsible for contracting the carrier to ship your consignment.
They will then issue the house Bill of Lading indicating the details you provided to them.
The freight forwarder also has the power to instruct the shipper not to release the consignment.
The company shipping your container should also prepare your export documents.
This is an addition to arranging any necessary inspections and obtaining any special documentation.
Moreover, the company should provide marine insurance and payor prepay origin or destination CSC.
Import Documents for a Consignee in Customs Clearance Process
As a consignee, you need to have a wide range of documents to facilitate the customs clearance process.
In many instances, the shipper will always send the documents to the consignee in advance, awaiting the shipment’s arrival.
This is essential since it helps in faster facilitation of the customs clearance process.
However, some of these documents often arrive with the consignment.
Some of the documents the consignee will need include the following;
- Bill of entry
- Commercial invoice
- Bill of Lading
- Import license
- Insurance certificate
- Technical write up where applicable
- Test report where applicable
- Inspection certificates where applicable
- Packing list
- Certificate of origin
What makes the Consignee an Important Party in Shipping
Ostensibly, the consignee is the ultimate important party in a shipping transaction.
If anything, the consignee is regarded as the customer or party the shipper needs to please to receive compensation.
In the recent past, customer experience is regarded as a vital business metric.
The moment the consignee is unhappy with the services they are receiving, they can easily switch to other providers.
And since competition is stiff in this industry, it becomes easy to lose a client, in this case, the consignee.
Therefore, there is a need for businesses to go above and beyond in serving and making the consignees happy in all transactions.
Ideally, fleet managers should endeavor to be in direct contact with the consignee or representatives during the process.
Moreover, businesses should also provide shipping updates and general customer service to guarantee strong experiences.
How to Improve Consignee Efficiency and Experience
Ideally, the consignee is an important party; you always need to keep happy.
And an ideal way of keeping the customer happy is to ensure you provide accurate and speedy services.
In other words, this can be tricky to attain, especially if you’re using paper-based systems.
At times a consignee may reject a shipment due to incorrect order.
However, you should never let the consignee wait several days or weeks later to get an update of the request’s status.
Instead, the consignee ought to get immediate notification about a review that is underway along with other important frequent updates.
An ideal start to attain this kind of service is by digitizing the paperwork workflows.
Working with a reputable freight forwarder is also an essential aspect of attaining improved consignee efficiency and experience.
You can choose to work with a freight forwarder offering mobile applications for documents sharing and processing paperwork with involved parties.
In essence, this helps in keeping every party in the loop regarding the progress of the process.
As you can see from this guide, a consignee is an equally important party in the entire shipping process.
Without a consignee, the shipping process cannot be complete.
Moreover, it makes you understand and appreciate the need for having a consignee and how to incorporate the party in the process.
Therefore, if you are in business, it is always vital to understand the essence and specific roles of this party in shipping.