Freight that has not been accepted or claimed by the consignee or is undeliverable due to error or omission on the part of the shipper, consignee, or owner or for which no disposition instructions have been provided within the 30 days of its arrival shall be considered unclaimed/abandoned.
Freight will also be deemed unclaimed/abandoned when Carrier has been instructed to hold freight at its dock for pick-up and such freight is not picked up within 10 days of arrival and no further disposition instructions have been received. Carrier may dispose of or sell by public or private sale or discard in a landfill or dumpsite any unclaimed/abandoned freight at its sole discretion. Containers are abandoned for a number of reasons: the shipper cannot afford to pay the freight charges, or goes bankrupt; the cargo is unwanted; the cargo is damaged; or there are disputes between shippers and consignees. But there are other issues, too.
In the shipping industry, there can be more considerations than would be for a storage facility. Any container that is not moving is losing money so container shipping lines do not want containers sitting in storage for very long. Once a container has been discharged from the vessel and free time has expired, there is a set amount of time before they can treat the container as abandoned. Sometimes it is a matter of the shipper having a dispute with the shipping line or freight forwarder and by the time it is settled, the demurrage is so high that is makes more sense to abandon than to pay the fees. Other times, the consignee for the container just never picks it up. Either way, the shipping line must get rid of the container so they can get it moving again. Abandoned containers can be a burden to the shipping line since it will cost them storage fees so they tend to get rid of the contents quickly. Just as with the storage lockers, the shipping line will auction off the cargo as soon as possible so they can get their container moving again.
Shipping companies have a number of options if the consignee fails to take delivery of a consignment under the terms and condition of the bill of lading issued for the subject shipment and under common law. The shipping company has a lien on the cargo by which it may recover the costs for storage, demurrage, freight, handling charges, etc. Typically a bill of lading would have terms conditions to the effect that if the customer/Consignee or the owner (customer) of the goods fails to take delivery of the goods in timely manner the shipping company shall be entitled to dispose of the Goods at the expense of the Customer at the shipping company’s sole discretion.
The process of law allow shipping companies to:
- Unpack cargo from containers, which frees the equipment for return to service
- Place cargo into a bonded store
- Sell the cargo
- Offset all costs incurred from the proceeds of the sale
- Take legal action to recover the difference between sale price and costs incurred
- If the sale price does not cover the costs incurred by the shipping company, then there is provision in international law for action to be taken against the shipper.
If a shipment is unclaimed and delivery cannot be effected, the carrier will so notify the proper parties as shown on the Bill of Lading by telephone, mail or electronic communication. If notification is sent by mail, the notice will be considered to have been given the first business day after it was mailed. Upon written instructions from the shipper, the carrier will return the shipment to the shipper, reconsign or otherwise dispose of it, all at the shipper’s, consignee’s or owner’s expense. If no such instructions are received within 10 days after the date of notification, the carrier will dispose of the freight by public or private sale or discard in landfill or dumpsite with no further liability to the carrier in accordance with the Bill of Lading.
In cases of abandoned cargo, the Carrier should seek to obtain an abandon and indemnification letter from the consignee together with original B/L confirming the consignee intention to abandon the cargo, including its ownership. In cases of lost Bs/L, the carrier should seek to obtain an undertaking and indemnification letter from the consignee against delivery of cargo. Options for resolution of abandoned cargo:
Re-exportation: This includes returning the goods to the shipper named in the bill of lading or to some other overseas place. As the goods had not been entered into home consumption by way of an import declaration, the shipping company may lodge an Export Entry that the reported goods are leaving the country and to obtain an Export Consignment Number
Sale to a New Owner: The shipping company may seek out a buyer for the goods. The negotiated price should, if possible, at least cover the costs incurred by the shipping company, be subject to the buyer accepting responsibility for lodgement of an Import Declaration ad payment of all duty and GST. The new buyer can take delivery from the bonded warehouse.
Disposal (dumping, destruction,etc): Due to environmental regulations and the requirements of the Customs Act, the shipping company must obtain prior permission to dispose of abandoned goods. Application for permission should be sent in writing.
How big is the problem of abandoned containers? According to one major shipping line on the Asia-Europe run, the numbers have decreased considerably compared with three or four years ago – but still shipping lines and the ports they call at routinely end up with boxes full of contents that no one apparently wants.
According to US Department of Transportation figures, more than 700,000 loaded containers are abandoned each year in the US alone – most of them ending up at ports. Worldwide, it is hard to determine a total.