What is Cargo Abandonment?

International Shipping & Freight Forwarding Terms – Cargo Abandonment.

What is Cargo Abandonment?

International shipping and exporting goods to another country can at times be a complex and confusing journey. One issue not often considered by shippers until it happens is that of cargo abandonment. Whilst this issue of abandoned cargo has always been around, it is of growing concern in today’s difficult economic climate.

Cargo Abandonment (also known as abandoned goods or uncollected goods) occurs where, after a reasonable period a consignee either refuses to take collection of a shipment, or they cannot be found. Depending upon which country the goods are in, this “reasonable period” can differ anywhere between 30-90 days. For the shipper, this can pose a considerable risk and increased expense.

Reasons for abandoned cargo

There are numerous reasons that goods are abandoned.

The goods have been mis declared and the customer refuses to take delivery of the cargo due to the discrepancy.
Change of requirements. The customer doesn’t want or need the goods anymore.
Change of regulations. The goods have become banned items that cannot legally be imported into the country anymore.
The customer disputes to quantity or quality of the goods.
The customer has gone bankrupt. They are no longer in business and cannot take receipt.

Whatever the reason, it is important to take action.

How to deal with abandoned goods

The initial step is to try and ensure that goods are not abandoned in the first place. This means drawing up clear and concise contracts. Clearly identify the obligations of the shipper, consignee, the shipping line, and the freight forwarder.

It is also vital to question whether you are dealing with reputable and reliable parties. Are they financially viable? Are they genuine traders? If you are not sure, be additionally careful when preparing contracts and payment terms.

If a situation of abandoned goods is encountered, the most important thing is to act quickly to mitigate any potential costs. The faster a situation can be resolved, the less cost to any or all parties involved. If the situation is left alone, it is possible for expenses to increase beyond the value of the cargo itself thereby making it more unlikely that the goods will be claimed.

Additionally, if you are dealing with any sort of perishable cargo, the longer the wait the more likely the goods will spoil.

Having a good freight forwarder who can keep you informed is essential at times such as these.

The consequences of cargo abandonment

When a cargo is left uncollected, the shipper may still be responsible for the additional charges. These can be;

Demurrage fees. Fees for the delay in returning the shipping container to the shipping line that owns it.
Port storage fees. Costs associated with the storage of the goods at the port.
Disposal fees. If the goods remain uncollected, there may be expenses owing for their disposal. If you have not already been paid, you will also be out-of-pocket for the cost of the goods themselves.

These fees can quickly build and become a considerable (and usually unexpected) expense. Your freight forwarder can potentially help to mitigate some of these costs through prompt and ongoing communications between all parties.

These costs and the fact that there may be situations that are not possible to resolve are why we also recommend shipping insurance to cover such circumstances.

Actions to take if your cargo is abandoned

Where there is no hope of any party coming to claim the cargo, there are a number of options. Most of these will allow you to recoup some of the expense, though your profit margins may be slimmer. The typical options for abandoned cargo are;

Resell the goods to a third party. This is easiest if the new customer is in the same location; they will simply need to arrange pickup. Should the buyer be at a different location, new shipping and import arrangements will need to be made.
Return the goods to the shipper. This may, or may not be viable depending upon the nature of the goods themselves (such as perishables). It will also depend upon whether it is cost-effective to do so.
It is sometimes possible to arrange auctioning of the goods through customs. This will likely result in a much-decreased sales value for the cargo.
Donate the goods. If the cost is prohibitive to return and you can’t find an alternative buyer, it may be worthwhile donating the goods to a suitable cause.
Destroy the goods. If there are no other options, you may need to destroy the goods. This will result in additional disposal fees.

How to avoid abandoned cargo

In order to avoid or minimise cargo abandonment issues, there are a few prime takeaways from this article. Importantly, know who you are dealing with and ensure your contracts are clearly formulated.

Secondly, take out marine cargo insurance to cover this eventuality. If your goods are abandoned, shipping insurance will at least help cover any losses.

Finally, ensure that you have a great freight forwarder on your side. They can help avoid many issues before they occur, and will be in your corner if they do.

At SPLS we are ready to assist with all your shipping needs. Contact us to discuss.