The responsibilities of a freight forwarder or NVOCC vary wildly. Having a good set of terms and conditions is key. Unclaimed cargo can be a freight forwarding nightmare and not always easy to spot at the outset.
Following on from our well received articles Cargo theft report and why freight forwarders should sell insurance. This article focuses specifically on cargo shipped by sea which is then not collected by the importer.
Can you avoid risk
Risk from unclaimed cargo in some instances cannot be avoided but can certainly be mitigated by good reporting and handling procedures. We are focusing here on when the freight forwarder acts as the NVOCC ( Non-Vessel Operating common carrier ).
What is meant by unclaimed cargo
Uncollected cargo or ‘unclaimed’ cargo has the following definition:
A shipment is deemed to be ‘unclaimed’ when the intended consignee has shown no intention to demand for or take delivery after a reasonable period of time. This issue of a reasonable period of time is difficult.
It may well be after some negotiated free time with the shipping line. This means that by the time a forwarder or NVOCC realises the importer is not coming forward he is already incurring additional costs.
Is there redress to the shipper
Under a bill of lading contract the shipper retains certain contractual responsibilities. These include payment for freight and general indemnity to the carrier. As soon as the issue is spotted the shipper should be advised. This is also good practice as the shipper may be able to speak to the importer/consignee.
This is also a good place to remind freight forwarders of the need to give shippers and importers regular copies of your trading terms and conditions.
Unclaimed cargo, what do you do
With unclaimed cargo speed is the key. Whilst the situation is ongoing it is imperative that you attempt to mitigate costs. Speak to your local partner to see if a more economical storage solution is available. We all know how quickly quay-rent and demurrage can mount up.
Ensure a final notice is issued within the jurisdictions date. A good insurance company and your local trade body can assist. Ensure all legal obligations are followed.
After the final notice is issued it will generally be necessary to provide a ‘Letter of Abandonment’ on behalf of the shipper/consignee. request a date for disposal of the goods from the authorities. This may be by destruction or auction usually.
Is unclaimed cargo a big issue
Unclaimed cargo is a perennial problem for NVOCC operators and so is nothing new. What has been reported by insurance companies is unclaimed cargo has become an increasing issue. More instances of cargo not being collected are being seen in some regions. It is important therefore that NVOCC’s due their due diligence when accepting a booking. Ensuring their staff are trained to see the tell-tale signs of a rogue shipment.
What are the tell-tale signs
It isn’t possible to fully list all red flags but some commodities are more prone than others. Some areas of the world, think trade sanctions, are also higher risk. Specific concerns over Scrap/Waste offer a heightened risk at leaving the NVOCC exposed.
Counterfeit products can increase the risk. A pull for exam can quickly see an importer disappear leaving the cargo abandoned.
The NVOCC should have robust procedures in place to identify such commodities or routings and then an experienced operator can determine whether the risk is worth the reward.
You can have all the systems in place but nothing is better at spotting rogue shipments than well-trained, experienced staff.