Consignee or Not Consignee?

Q: I’m working through a situation and would like your professional opinion on the most accurate solution. We work as a lead logistics provider for a U.S. importer (Company A). To that end, we manage its freight forwarders and the transactional shipments.

Company A places a purchase order to Company B. Company B uses its factory in Asia to manufacture the goods. Company B is also the importer of record for the U.S. ocean imports (a commercial agreement between companies A and B).

Freight is shipped directly to Company A’s location on the non-negotiable sea waybill, and Company B insists it be listed as the consignee, with Company A listed as the notify party.

Our forwarder is concerned because the freight is being delivered to Company A, but the consignee is Company B (even though it’s a sea waybill). Company B is refusing to change the sea waybill, because it contends it must be listed as consignee to be the importer of record and file entry.

Can you provide your professional opinion on what is accurate?

 

A: Who cares? Well, I suppose the answer to that question is that far too many people seem to care a great deal about this, including some who have no business caring. In that last category I would put your forwarder, who apparently is raising the question without any rational justification.

Even in these security-conscious days, in which our intrusive government seems to want to know everything about everybody, including who talks to whom on the telephone, I don’t think it gets all that concerned about who is named as consignee on bills of lading for imported freight. The fact that Company B chooses to use Company A’s address as a convenience address for itself on the ocean waybill isn’t therefore of consequence to anybody. The forwarder is simply making itself busy over something that shouldn’t concern it.

As for Company B, it seems awfully defensive, and unnecessarily so, about its status as “importer of record.” Perhaps there are tax reasons for that, or some other reason beyond my knowledge, but the whole contretemps strikes me as the archetypal tempest in a teapot.

The transaction between companies A and B seems to be a classic example of the Incoterm delivery term, DDP — “delivered and duty paid.” That is, goods are delivered to the buyer’s place of business with customs import duty paid by the seller, and only then is the transaction complete and title passes from seller to buyer. This isn’t all that unusual an agreement between sellers and buyers of imported goods.

But so far as I’m aware, it isn’t necessary for the seller to be identified as consignee on the bill of lading to accomplish this sort of arrangement. U.S. Customs and Border Protection doesn’t care who pays the import duties. It only cares that they’re paid. It won’t, that is, give the check paying those duties careful scrutiny, and reject it if the payer isn’t the same as the party identified on the ocean bill as consignee.

This generally will hold true of the paperwork associated with clearing the goods through Customs at the port of entry, too. As I say, DDP terms aren’t unusual, and are accomplished successfully without the seller being identified as consignee on the shipping documentation.

In other words, there is no right way of doing this. It’s simply a matter what’s convenient for the parties and what suits their fancy. If Company B wants to show itself as the consignee for reasons of its own — perhaps to ensure it gets paid before the goods are turned over to Company A — I see nothing wrong with that. As to the importer-of-record business, you say companies A and B have some kind of business arrangement between them regarding this, and perhaps Company B’s protectiveness of its status on the shipments has something to do with that. I can’t be sure.

However, there is nothing wrong with doing things the way they’re being done. I think what you should do is tell the importing forwarder to mind its own business and not concern itself with who the parties choose to identify as consignee on the transportation documents. No laws or regulations are being violated here, and that being the case, there is no justification for the forwarder to concern itself with the identity of the person receiving the goods.  

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.

 

 

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