Liability of the freight forwarder on Abandoned Cargo

Liability of the freight forwarder on Abandoned Cargo – a case study based on below question from a reader, Rehan..

“Fwdr booking 10 containers for Shipper ABC which is consigned to XYZ and now the consignee not taking delivery at destination… Forwarder received the freight n released the B/L to shipper.. now is the forwarder liable or responsible for consignee not taking delivery at destination..”

A good question Rehan, one that is faced by many freight forwarders around the world..
You have however not clarified whether the bill of lading that you are talking about is a House Bill of Lading (HBL) issued by the Freight Forwarder or a Master Bill of Lading (MBL) issued by the carrier..

The answer to this question varies depending on which bill of lading you are talking about and as we have already seen, there is a distinct difference between Master Bill of Lading and House Bill of Lading..

Liability of a freight forwarder on abandoned cargoBut before that, lets go to the very beginning as to HOW and in WHAT CAPACITY you made this booking with the shipping line..

  • If you booked it “as agents” of the shipper and this fact was clearly made known to the shipping line – either via their booking form or clearly indicated on an email or covered via your STC (Standard Trading Conditions), then you will have limited to no liability.. In such cases, if required, you can invoke your Liability Insurance cover with an insurance and risk management provider such as TT Club (you do have one right..??)..
  • If however, you booked it under your own name or failed to mention the fact that you are acting in the capacity of an agent, then you might have some answering to do..

As mentioned above, what bill of lading was issued to the customer and how it was issued also plays a vital part in this case..

Scenario 1 – You have issued a HBL to the shipper, consigned to a direct consignee who hasn’t cleared the shipment

In this case, since you have issued a HBL, there must be a corresponding back to back MBL.. It is most likely that on the MBL your company would be shown as the “Shipper” and your agents overseas would be shown as the “Consignee” and/or “Notify”..

Image for MBL and HBLIn cases of abandoned cargo the carrier will pursue the entity listed as the shipper on their bill of lading being the original party to the contract and in the case of a MBL issued as above, that party would be you and since you have acted as a principal and not as an agent, the shipping line will be well within their rights to place a claim on you..

Scenario 2 – You have issued a MBL to the shipper, consigned to a direct consignee who hasn’t cleared the shipment

In this case, since the document is not in your name and also presuming you booked the cargo “as agents” then you will have limited to no liability..

If you are a member of a Forwarding Association in your country, then those associations would have created STC’s for the use of their members and generally since such STC’s would be localized, this should cover your liabilities if any sufficiently..

While we have had a discussion about “Can anyone become a Freight Forwarder” already on this blog, any serious freight forwarder should at the very least have

  • A comprehensive Liability Cover and Risk management
  • A properly incorporated STC in order to manage the risks and limit exposure

to cover themselves sufficiently before embarking on the business of freight forwarding..

You can read some useful articles regarding STC below..

Would be interested to hear your thoughts on the liability of a freight forwarder in the case of Abandoned cargoes.. Feel free to comment using the comment form below..

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

13 comments on “Liability of the freight forwarder on Abandoned Cargo

  1. indika vitharana says:

    I’m faced with a similar situation with a 40’RH container of semi husk coconut sent from Colombo to Jabel Ali where cnee does not present themselves for delivery.

    The port/liner demurrage, reefer plug-in charges etc are mounting daily & the carriers position in this regard is that we as the sub-agent should take liability of all charges in case of auctioning or destroying the container load.

    Shippers position in this regard is that considering the extremely high charges of re-importation to colombo, they too have abandoned the goods & disclaims any liability of further payment in this regard.

    Similar Asfar’s case, this shipment too was effected over a liner B/L where no involvement of sub-agent’s or a House B/L is involved & the only solution I see is auctioning the cargo. But my worry sir, is that carrier still insist that we pay demurrage charges prior to considering auctioning of these goods, but from what I’ve heard, if auctioned, carrier will recover their costs indefinitely from the bidder & not by the carrier agent. Appreciate some professional advise as to how to settle this matter.

  2. James says:

    Surely under the MBL the shipping line would be entitled to a lien on the abandoned cargo? By not using this right the shipping line is being lazy and simply profiteering.

    1. Hi James, while the shipping line maybe entitled to a lien on the cargo, getting back any monies on a cargo that is abandoned is not quite so easy as there are several costs and first and foremost cost recovery generally would be that of the state, port, customs etc and only then the rest.. That could also be a factor..

      As the saying goes “The agent’s neck is the softest”..

  3. asfar shabab says:

    dear Sir,
    we have send one container from jebel ali to colombo in the month of december 2014 but consignee has not yet approached the shipping line to take delivery order, now the shipping line is saying that we have have to settel all the cost.
    for your kind information we are freight forwarding company and we have not issued house bill of lading and in master bill of lading its actual shipper and actual consignee.
    you reply in this regard will be highly appreciated.
    thank you
    warm regards,

    1. Laura says:

      Dear Asfar
      As far as we know that in Colombo port, Sri Lanka, there is special rule for long staying containers. About over 45 days and we – as the carriers, the cnee , any party cant involve and the shipment will be held by port Authority.
      We used to have the same case in 2012 and shpr must bear all extra charges to the shipping line.

    2. That is interesting to hear Laura.. Thanks for sharing..

    3. Hello Asfar, your case would fall under Scenario 2 in which case you can have a look at the options you have as mentioned above and check further..

  4. Hi there Leandro ctr cab be unloaded by special procedure, as u are Brazilian too , this is called mandato de segurança contra Receita \Federal , if u have more doubts send me a msg tks ! By the way after 90 days goods are consider abandoned and confiscated by Receita Federal ( perdimento )

  5. Leandro Neves says:

    Really interesting topic!
    Congrats on the article.

    1. Osacargo says:

      Yeah, I completely agree, very nice article.

  6. Very important point and very good article !
    As per Brazilian rules , ctr is not consider a packing but part of the vessel, so the ff can unload the ctr before goods is consider abandoned it happens after 90 days withouth clearance, but the unloading can be done before this period, this is a way to save huge demurrages ammounts.

    1. Leandro Neves says:

      Hi Marcello,
      I’m Brazilian and didn’t know about this information “ctr is not consider a packing but part of the vessel, so the ff can unload the ctr before goods is consider abandoned it happens after 90 days withouth clearance”.
      I have one doubt…how can the FF unload the CTN without clearance it?…I mean, CTN will be at “primary zone” in the POD at this time. And, what happens to the cargo (goods) in this case?

    2. hassan says:

      this case is rarely to happen but we face it , maybe money laundry behind this abandon cntr

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