Policy & Compliance
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the freight forwarder is willing to take those risks in what are increasingly turbulent times. The simple lesson is that too many bookings are regarded as simply a ‘job’ and staff do not pay sufficient attention to commodities being shipped and the routing. All consignments should be regarded as a ‘contract’ and subject to due diligence before being accepted. It is essential that Members ensure that they have clear acceptance procedures which incorporate BIFA terms into the forwarding contract. It should be remembered that consignments can be rejected at the time of booking. Looking back through our records it is clear that certain types of goods are more likely to be abandoned than others. These tend to be low value items of fluctuating value; however, we have seen relatively high value consignments abandoned for a variety of reasons. Given recent international troubles, sanctions and embargoes imposed between the time of goods being shipped and arrival at destination have become increasingly common problems. As we have seen, certain commodities present greater risk – and may be influenced by geographical or seasonal conditions. Being alert at the outset of the booking process may reduce exposure. Experience will complete your list, but here are a few commodities commonly presenting higher risk: • Waste – all kinds including fabric, paper and wood, • Scrap – metals, plastics, wood, • Cargoes intended for recycling – often waste shipments with an alternate descriptor, • Used computer equipment, • Used tyres,
Abandoned cargo Abandoned cargoes are a continuing issue for many Members. While the best defence lies in the original contractual arrangement, in some cases learning how to identify risks early is key to helping mitigate the fallout
In the maritime environment one of the most frequently asked questions relates to the handling of abandoned consignments. BIFA always encourages Members to monitor the final delivery of consignments, particularly those shipped on a FCL or DDP basis. Based on experience, consigning shipments to an agent at destination seems to minimise this particular risk. Shipping lines have large departments dealing with abandoned cargoes and, referring to the ‘Merchant Clause’ included in their terms, will often seek to recover quay rent and demurrage costs at origin. This explains why it is so important to try to monitor the clearance and delivery of shipments from arrival port to final destination in order to avoid unwelcome large invoices. Substantial costs Abandoned cargo is not a new challenge. Every year, delivery delays or failure of the consignee to collect cargo results in substantial storage, container demurrage and container detention costs. If the freight forwarder’s customer has ceased trading, very often the shipping line will pursue the freight forwarder, who may have booked the cargo with the carrier, for the outstanding monies. The best defence often rests in the original contractual arrangement, whereby the forwarder can argue that it has acted as ‘agent’, putting the shipper and line in a direct contractual
arrangement. In this scenario the freight forwarder should be able to argue that because there is no contract between it and the shipping line, it is not liable for any charges. Recently we have seen lines starting to present letters of indemnity to, in particular, import Customs agents making them liable for all related costs at destination. BIFA’s guidance is that these indemnities should not be signed, pointing out to the shipping line that when acting as a Customs agent you are not party to the shipping contract and thus, in law, you are not liable for these charges. However, there may be occasions where there is no legal or contractual way to escape liability or recover the costs associated with abandoned cargo, including container demurrage, port storage, disposal costs or fines. Often these will relate to scenarios where the freight forwarder is in a direct contractual relationship with the shipping line. As a result, learning how to identify risks early to help mitigate the inevitable fallout is key. Commonly, BIFA recommends establishing effective due diligence procedures and developing specific processes to identify suspect shipments in order to stay one step ahead. Early detection and proactive management reduce losses. However, in the complex logistics supply chain such things are not always straightforward. In many ways it is a question of risk and whether
• Perishable items, • Personal effects.
Tightening regulations It should be remembered that countries are increasingly tightening their regulations regarding what type of waste is accepted for re-processing and, given its value, if refused by the consignee very often the consignor will not be willing to accept the cargo being returned to it. This problem was greater when freight rates were much lower. However, certain metals have appreciated in value resulting in a continuing issue. In addition, we hear from Members encountering issues when cargo containing misdeclared, counterfeit or prohibited items is abandoned. Having spoken to many BIFA Members that have dealt with such scenarios, they are surprised that legitimate trade is being used in this manner to facilitate what is clearly criminal activity. Often a Member says to the BIFA Secretariat
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May 2022
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