Help, I am being held to ransom by destination agent of NVOCC operator..

image for case studyCase about a reader allegedly being held to ransom by destination agent of NVOCC operator..

Hello readers, any thoughts or suggestions to help out one of the readers Sunil who has a problem/question as below..

What recourse should Sunil take..??

I have serious questions about the legal relationship between the Carrier (Liner), MBL holder (Master Bill of Lading ) , HBL Holder (House Bill of Lading holder issued by MBL holder), and ultimate consignee as seen on HBL.

I am the consignee of HBL and face the practical problem in India, where Forwarder in United States or China collude with the Destination Agent in India to extract exorbitant charges towards DO oir Delivery Order charges.

I arranged for a shipment from China and carrier was *** NAME OF NVOCC OPERATOR WITHHELD***. They issued a MBL to their Shipping Agent mentioning destination agent as consignee. In HBL issued by the forwarder, the ultimate consignee was us. However, destination agent was same as in MBL.

image for ransom noteThe Destination Agent billed heavily towards Destination DO charges, claiming Rs 41,000 ($700) for a small LCL Shipment of just 4 cbm/260 kgs which was just 4% of full FCL by volume or 1% by weight. The CIF Value of the machine was $ 1,137 (Rs 66,600) .

In short, the Destination Agent billed almost 61% of CIF Value as their charges just to issue Delivery Order.

Now, when Destination Agent does not issue DO, we can not present the shipment to customs, and we go on incurring Demurrage charges.

Since we are the True, Legal and rightful owner of the Shipment, the Liner (Carrier) is legally required to deliver the cargo/property to the True and Rightful owner, that is, we as consignee.

The Carrier contends that they have no direct relationship with the Consignee as per HBL and they owe the liability only to MBL Consignee (who is not legal owner of the cargo or goods because it was bought by us against payment).

We want to claim the cargo from the Carrier whose agent the MBL holder issued the HBL. The actions of the agents are binding on the Principal (Carrier) and in fact, the forwarder has issued the HBL as Agent for the Carrier.

The normal charges are about $125 or about against which the Destination Agent is charging us $700. They may claim even $1 Millions which we are not supposed to pay.

image for what can I doWe have claimed the Cargo from the carrier under HBL issued by the Forwarder as Agent for the Carrier. So far, there is no reply. Our goods are incurring the demurrages. we are prepared to pay normal charges to the carrier as per their normal scale.

If the Carrier does not oblige us, we want to Sue the Carrier for “Default on Delivery under Freight Prepaid Bill of Lading” and inform all shipping companies around the world to bring moral pressure. We can not allow ourselves to be blackmailed, and cheated by the Destination Agent.

Are there any innovative thoughts to claim our goods under Freight Prepaid Bill of Lading without becoming victim of blackmail of the destination agent?

 

What did you think of the above article..?? Comment below..

20 comments on “Help, I am being held to ransom by destination agent of NVOCC operator..

  1. haider says:

    PLS HELP… I have paid full freight amount but shipping agent in CHINA does not surrender MBL and don’t release cargo. Suggest me how can i issue my cargo. they are blackmailing us

    1. PUSHPARAJ says:

      It;s purely scam company of your forwarder who arranged your shipment,so they need more money from you to release the goods, better you have talk with your supplier to help on this case

  2. Tabrez says:

    Since this is the case you have only option to catch hold of the shipper who in turn will ask thier pricipal forwarer in China /USA to pressurize indian forwarder..this happen becasue at Country oF Origin shipper takes rebates or Negative Freight & poor forwarders have to recover entire amount at destination.

  3. I agree with you totally Salman.

  4. Dear Consignee So, what happened ?
    1) Did the LCL consolidator reduce the destination charges ?
    2) Did your supplier accept that he made you pay the origin charges disguised as destination charges ?
    3) Did the suppliers custom broker accept that he also got the kick back once you paid all these charges at the destination ? While his job was just to do customs clearance but he saw the opportunity to make some quick money.
    4) Or did our courts give you an order in your favor within the free days of the warehouse ?

    Next time try to follow these steps
    1) Make it FOB & Keep ocean freight cost under your control
    2) Get upto 80% discount on the destination charges compared to shipments which come as CIF
    3) For your information, our company handle LCL consolidations & we have 80 to 100% cargoes on FOB basis, our customers are happy as they have the power to choose end of the day they are paying for everything.
    4) Avoid mediators to negotiate the freight , as they blame LCL consolidators for high charges & act ignorant make innocent face when you ask them how it happened ?

    1. Yes, this is very common, especially in countries like India, where the people have no ethics.

      But make it FCA, not FOB for container shipments! FOB is only for bulk and break bulk, not for containers, either LCL or FCL! . . . For God’s sake Naveen and Nirav, read Incoterms 2010 and come into the 20th Century!

      Shippers who venture in to LCL shipments using others to prescribe their Incoterms rules and methods of shipments get exactly what they bargain for . . . a mess. Next time, hire a good international trade consultant if you are unwilling or incapable of doing the research yourself, or hire a good and reliable freight forwarder like WheelSky Logistics, Inc. (www.wheelskylogistics.com( out of Los Angeles, California, who know about the Incoterms rules and do not take the position that forwarders do not need to know about them.

      Knowledge is power and lack of knowledge results in the situtation adddressed in the example above.

      Nobody ever said life would be easy.

    2. Hello David, I appreciate your responses and comments on this blog based on your experience and knowledge of the industry.. While your intentions might be good, I must ask that you change your approach and style of communication..

      The way you respond to readers’ comments on this forum is more often than not, judgmental, rude and in some cases insulting, especially with regards to people’s nationalities and ethics..

      In one of the previous posts (http://shippingandfreightresource.com/a-chinese-company-has-defrauded-me-who-can-help-me/) you used some strong words against the Chinese, Africans and Vietnamese (“the Chinese, just as the Vietnamese and Africans (although I love all those cultures dearly, have spent substantial time in those countries and am married to a Chinese), are basically dishonest and self serving.”)

      In this post you are attacking the Indians (“this is very common, especially in countries like India, where the people have no ethics.”)..

      There are unscrupulous people in all countries.. I have examples where people have sent me cases about FMC registered forwarders in USA taking them for a ride.. That doesn’t mean that all Americans lack business ethics or are fraudsters..

      Please refrain from tarring everyone with the same brush..

      You are also attacking people about being ignorant (example Eldrakan in this post).. If you are in the field of marketing, when dealing with container shipments all over the world, container shipments that are controlled by the importers in any country are still referred to as “FOB shipments” and container shipments controlled by the exporters are referred to as “CIF shipments”..

      Whether this is actually FOB or CIF doesn’t matter as the people know in what context the reference is made.. Shipping lines refer to the importer controlled business as “FOB market”..

      Eldrakan and all the others who are referring to FOB in containerised shipments (not just here, but also in the Incoterms forum in LinkedIn) are referring to this aspect..

      There is no need to be judgmental and racist when responding to these comments.. No one can say that they know it all in any field.. People visit forums like this to gain knowledge, to share knowledge and also to ask questions..

      Even if the questions may sound stupid and ignorant to you (because of your years of experience and knowledge in the industry), there are people who are genuinely not aware of the answers and that is the reason they come my site – to find out answers to those questions..

      If one is prepared to answer questions asked by people, then those answers have to be constructive and helpful..

  5. Nirav Vora says:

    Hi Sunil,

    Overcharging is very common for LCL cases. The point may be of negative freight at origin and the charges been claimed from you at destination. This could be the reason for higher charges.
    I have also faced similar issues and now I do it on FOB basis thru a trusted agent in India and the cost have come down drastically.
    There is no legal course you can take against anybody but catch hold of a good agent and do it on FOB basis.

  6. Obviously, those below who have used Incoterms rules in their responses have never read Incoterms 2010. (or Incoterms 200 for those of you stuck in the dark ages), as the blatent errors about Incoterms exhibited below are so incorrect, it is pitiful.

    EXW for internationall shipments? Come now . . . FOB and CIF for container shipments? . . . Oh, NO!

    I suggest you all purchase a copy of Incoterms 2010 from the International Chamber of Commerce and read them, rather than just relying on misconceptions and quick headnotes you pick up on the Internet. And join the Incoterms Group Forum on LinkedIn . . . you might just learn something to keep yourselves from embarassing yourselves in a public forum as you have just done.

    1. eldrakan says:

      Dear David,

      I do not see the point to become judgemental.

      However, as a FF for more than 15 years, and as an FF agency manager for +/- the same time, EXW for international shipments, FOB, CFR & CIF for container shipments are so usual. I could send you thousands of invoices issued by hundreds of clients. But will not do since it would be a breach of confidentiality.

      I agree with you when you disagree (theoratically) … as anybody who ever “only” read the article about Incoterms (whatever the version) on Wikipedia.

      But, reality is a embarassing friend … these Incoterms ARE actually used.

      Now, what is your perspective on the question posed by our friend Sunil how is actually having a problem ?

      Not embarrased at all, warm, somewhat humoristic, yet not sarcastic regards, Eldrakan.

    2. Dear whoever you are who is too timid to actually put your real name out there . . .

      I have been involved in international trade for over forty years and eight years owner, chairman and CEO of a very successful international shipping company, I have been completely familiar with the Incoterms rules since 1980, followed their evolution through Incoterms 1990, Incoterms 2000 and Incoterms 2010 and understand them fully and write about them frequently.

      Your ignorance in saying, ” . . EXW for international shipments, FOB, CFR & CIF for container shipments are so usual.” is just one more example of people who have absolutely no knowledge about the Incoterms rules, have never read them, and who believe they know it all. I believe you do not own a copy of Incoterms 2010, and if you do, tell me what the Guidelines to EXW, CFR &CIF says about container shipments. Put your money where your mouth is and stop being Mr. Expert.

      While those Incoterms rules may be used by ignorant people such as yourself and your customers, it does not make them right. As I said, I am willing to bet you do not own a copy of Incoterms 2010 and have never read beyond what you can find on the Internet about the Incoterms rules, which are not the rules themselves.

      My comment in this discussion was strictly related to the lack of knowledge and misapplication of Incoterms rules . . . If Sunil, or anyone else, wants my advice regarding the substance of his question, they will need to pay me my usual hourly rate for this type of consultation, which is USD$350 an hour.

      That, my friend, is “reality” . . . . .

  7. Gunvaldis says:

    There is no much you can do at this stage – unfortunately here are still many tricksters within shipping industry.

    You cannot be on the save side even if you would have written rate offer. To make the things worst – you cannot claim your goods with the shipping line as legally you are bound with the NVOCC and basically apart from commercial sense there is no law prohibiting forwarder to issue invoice for such high amount. In your case time is essence as usually warehouse demurrage and storage costs are pretty high so for product with invoice value @ $1,137 these extra costs are killing.

    Right now every hour costs you money – therefore forget about legal procedure. If you are prepared to write off those $1,137 then just reject the goods and purchase new set. NVOCC still has the right to re-direct all these costs on account of supplier but this is quite long legal procedure and assume crooks like these will never go for this.

    Another thing you can try to do is write a letter explaining all the situation and stressing the nonsense. Send to shipping line management, also if there is any official body in Your country that governs NVOCC. Check if forwarder belongs to any other trade organization, like Chamber of Commerce, etc. send to these as well.

    But – remember – legally you cannot sue – just request consider normal commercial sense.

  8. Karen G. says:

    I agree with everything everyone below has mentioned. I do believe that the shipper should intervene and assist to get the rates reduced. This has happened to me on more than one occasion ( one of them being India) and more than likely the USA forwarder has an outgoing relationship with the consolidator. Personally, I expect my consolidators agents to be fair and not over charge. I would askt he shipper to intervene and if anything can be done, I am sure it will be.

  9. Clive A says:

    Hi Sunil
    Suggest you follow the recommendation of the Shipping Line and clear cargo soonest to limit dem costs . This practice was highlighted in RSA a year ot two back on this very same blog however I am not sure of the outcome or resolution (if any).
    Shipping Line and related Shipping costs / surcharges (as this perhaps) are a contentious issue and have been highlighted recently but the solution ???
    You may for peace of mind arrange a meeting with the Management of your local NVOCC Operator and ask why the most minute part of the shipping operation
    represents 58% of the cost of the goods

    Additionally let us reverse the process as a test of costs and have YOUR local NVOCC Operator / Agency price the shipment in its entirety using their own Agency at POL after your Supplier has delivered cargo to their Agent’s warehouse in China.

    Thereafter table all data you have with your Import / C & F Governing Authorities and have address these discrepancies / concerns.

    best wishes
    Clive A

  10. eldrakan says:

    Dear all,

    1st of all, destination charges of LCL shipments (and FCL & air shipments) should be negociated before cargo moves. The quotation must include the details of the destination agent so consignee can contact the person in charge of billing these destination charges.

    2nd, consignee (when buying EXW, FCA or FOB) can buy LCL import rates and then will usually get lower destination charges.

    3rd, the shipper (selling CFR or CIF) should have indicated the details of the destination agent ; the consignee would have been able to negociate the destination charges in advance.

    4th, how can anybody buy & move goods across the world without evaluationg all charges ?

    Yes ! these rates are obvious highway robbery but in the same time, yes ! consignee chose to use this highway, got screwed, and finally needs to pay the ransom. Going to court may be useful in the end. But consignee will NOT get his cargo on time for whatever its prupose was.

    There is no innovative AND fast answer to this situation. At least, I don’t see any.

  11. Biju Paulose says:

    The carrier is right on there part since the terms of the contract in your case is between line and the forwarder so the ultimate customer for the carrier will the the forwarder, So not sure whether you will be able to sue the line.

    The best is to speak with your supplier who has nominated this shipment.

  12. A Shipping Line says:

    You won’t get very far in taking legal action against the shipping line. They have “sold” the container to the consolidator and the consolidator is their customer.

    I suggest you speak to your supplier and ask him to speak to the local agent abroad to put pressure on the destination agent to reduce their charges. If they refuse then I don’t know what else you can do other than ask your supplier to change to a company with more reasonable charges next time, or change the terms of sale to FOB which will mean you get to choose the freight company.

    Of course, if you move into the area of full container loads, then I’d urge you to use the carrier direct, rather than an NVO.

  13. SUNIL MENON says:

    Dear Sir,
    This normally happens in lot of import LCL shipments. under CIF / Freight Prepaid shipments.
    Always prefer to inform shipper / supplier to send the destination charges on email before taking the shipment on Prepaid basis. if possible, you can advice shipper to release the BL with the dest. charges mentioned on the HBL as an attached Rider sheet. this will always help to avoid any additional charges at destination.

    in your case, i feel that the best option is to write to shipper and inform them abt this overcharging at destination. Shipper will check with the coloader and pass on any benefit / discount applicable.

    other option is that you need to speak to the NVO and request them for a revision on the dest., charges.
    if they are keen in taking future biz, they will revise what ever best possible.

    trying to legally take this matter will only create trouble for you and also to keep in mind that the cargo demurrage is mounting, my personal opinion is that you first write to the shipper, meet the local agent.
    if no positive reply from both the parties, then its better to get the cargo cleared first and then proceed with any legal options.

    being a CIF shipment, the consignee does not have much options but to pay the local charges applicable and take delivery.

    1. jrome dsouza says:

      Probably the charges are inclusive of origin LCL stuffing charges and destination destuffing charges added with the delivery order fees. This may be based on w/m and does not based on value of the shipt. Let the ultimate consignee.get the break down of he charges claimed and compare it with other LCL shipt claims made to other conee,s. Also check with other NvOCC
      operation at destination to find out the reason for such claim.
      If there is not much difference then it is better not to per sue legal action but request the desti.
      agent to reduce the charges proving the actual facts/value etc.
      If the destination agent object then there is no recourse but either to leave the shipt. or to clear asap.

(Estimated reading time: 3 minutes)