What should the supplier do if the customer abandoned the product after the goods have arrived at the destination port?

By justchinait
 / 
December 3, 2020
 / 

Case 1:

After the goods arrive at the port, the customer does not pick up the products, and the shipping company requests to return the goods and let us bear all the expenses.

At the end of July, two shipments were delivered to Port Klang, Malaysia. The two shipments arrived at the port in mid-August, but customers did not pick up the goods until now. Before the goods arrive at the port, we have reminded the customer that they are about to arrive at the port. After arriving at the port, we suggest the customer pick up the goods.

A month ago, the freight forwarder told me that the customer still did not pick up the goods. I have been urging the customer to pick up the products. The customer always said that he would pick up the goods today, but it has been delayed until today. Customers do not communicate with us because they do not pick up the products for any reason. It will always be “I will pick up the goods today”.

Now the LCL company is impatient, gives us an ultimatum, notify the customer one last time, and if the customer does not mention it, we must return it to us. We must pay the incurred demurrage fees and other expenses.

Analysis recommendations:

If the foreign customer’s company goes bankrupt or the goods are not picked up after arriving at the port, it has been more than a month since the harbor’s arrival and incurred a lot of costs. The customer will not pick up the goods. We ask the forwarder to explain to the shipping company that we abandon the products, but the forwarder says Only half a year can be abandoned.

So here comes the problem. The port cost in half a year is estimated to be an astronomical figure, and domestic factories will not be able to afford it. The value of the goods is also meager, and the future cost will be much higher than the value of the auction. The specific questions are as follows:

1. Will the shipping company pursue these demurrage fees, demurrage fees, and terminal fees?

2. Is it recourse to freight forwarders or foreign customers or domestic factories?

3. If they cannot pay, will the shipping company go through legal procedures?

So, how to deal with export abandonment?

1. Take the initiative to abandon the goods.

First, ask your freight forwarder to seek help from the agent at the port of destination, first change the consignee to the designated agent, and then abandon the goods in the name of the agent. Why has to be this way? Because if the consignee is not changed, it should be difficult for the consignor to abandon the goods unilaterally. But after such a change, the agent at the port of destination will have to bear a lot of responsibilities, including the cost and responsibility of abandoning the goods. This condition must be negotiated with the freight forwarder. People are willing to help you do this. How much you need to bear.

2. Resale.

See if you can find other buyers in the destination country, change the consignee of the bill of lading and then sell them to them; of course, there will be a discount. There are also significant constraints in doing so. One is whether the products are customized and difficult to resell, and the other is to find customers who are willing to take over.

3. Please ignore it.

Then don’t care about anything, and your freight forwarder will bear all the liability costs. This is the worst. Maybe you are all right, but the freight forwarder and the company who picked up your shipment are in bad luck. The key is that this matter is not the responsibility of others. Of course, the other party may also sue you. According to Article 86-88 of the Maritime Law, if the consignee has a problem, the consignor must bear the cost.

4. Return shipment.

You can return to the private bonded area for storage first. If there is a new order sent abroad or is inspected and repaired, replace the packaging and bonded warehouse for simple processing such as packaging, relabeling, and shell replacement. You have sent overseas. The bonded area is equivalent to foreign countries, and the return of goods to the bonded area for inspection and maintenance does not require import declaration, so there is no need to apply for the return of the goods to the customs, and there is no need to pay taxes or pay a deposit to the customs.

Domestic export goods, especially electronic products, small household appliances, etc, have a high repair rate. The traditional way of returning to the factory for repair requires multiple cumbersome procedures such as customs, commodity inspection, and national tax. Using the advantages of the bonded area and outside customs can quickly solve the repair problem.

The bonded area has a policy of “outside customs within the country”, that is, it is within the national border but not under the jurisdiction of the domestic customs. Goods entering the bonded area from the country are equal to export, and entering the country from the bonded area is similar to import (import customs declaration).

Therefore, returning the goods returned from abroad to the bonded area means that the products have stayed elsewhere, and the import declaration has not been processed. Therefore, there is no need to apply for the return of the goods to the customs, and the goods returned to the bonded area can be re-exported without tax.

Below we analyze the advantages of returning to bonded warehouse storage for repair:

a. The procedures are simple: no deposit, tax, exemption, exemption from commodity inspection, exemption from the customs declaration, provide us with the packaging, several pieces, amount, net gross weight, and then the QP system can apply for entry maintenance and entry maintenance.

b. Fast timeliness: After the goods arrive at the Hong Kong/Shenzhen terminal, our company can arrange transportation and pick up the container and pull it back to the bonded warehouse for repairs. Workers can enter and leave the processing area freely without a visa for repairs—Shenzhen re-export.

c. Low cost: The cost of workers and maintenance site costs is much lower than in Hong Kong or overseas.

Case 2:

The customer is bankrupt, the creditor controls the goods, and the freight forwarder asks for storage fees.

We have a batch of goods made CFR with customers. The goods arrived in Hong Kong in July last year. Because the customer went bankrupt and had disputes with creditors, the products have not been able to withdraw. Our payment has been received in full. However, the agent at the port of destination applied to our family. The agent requests for warehousing, detention fees, and other fees, and our agent charges us these fees. The domestic agent has our export tax rebate receipt, and the other party does not deliver the tax rebate according to this. The tax rebate will be declared immediately. This matter has not been resolved yet, which is very difficult. Now foreign agents threaten to auction the goods, do they have this right? Is this legally true?

Analysis recommendations:

First of all, make it clear that as SHIPPER, you are indeed obligated to pay the storage fee for the batch of goods (the second responsible person, as long as CONSIGNEE does not pay, you have to pay);

Second, after the goods arrive at the port, the ownership of the batch of products belongs to CONSIGNEE. If the products are to be abandoned, CONSIGNEE should write a written statement before SHIPPER’s turn to write;

Third, no law supports that freight forwarders can withhold your verification form. As long as they go to court, they will lose the case;

Fourth, after a certain amount of storage fees are incurred at the terminal, the other party’s port has the right to auction the goods, but the auction proceeds are paid to other creditors after the storage fees are paid. (Of course, if the auction proceeds are not enough to pay the storage fee, SHIPPER and CONSIGNEE are obliged to make up for it.)

Finally, if, as you said, the goods have been controlled by the customer’s creditor, then the creditor should pay the warehouse rent as CONSINEE’s principal. (Theoretically, if your client, as CONSIGNEE, does not receive the goods first, his creditor has no right to control it. If he has received the goods, then the owner of the products is him instead of you. Of course, it may be different. National laws are different, so only your customers will know how local laws are.)

Analysis recommendations:

After the goods arrive at the port, how can the customer return it or sell it to someone else without paying?

Most countries in the world have this regulation. When the imported goods arrive at the port, the goods’ jurisdiction will be transferred to the customs. To protect the interests of buyers, the traditions will not allow anyone other than the consignee to move this—batch of goods.

This has brought a lot of trouble to the seller. When the seller fails to collect the full payment and wants to control the goods’ rights, he finds that he may face a shortage of money and goods.

Because whether you want to return or resell, you must meet any of the following two conditions:

The original consignee gives a declaration of abandonment;

The original consignee informed the seller to refuse to pay for the goods!

As a result, some buyers will keep dragging them, and they will never say that they will not pay so that you can’t get the evidence. Abandonment statement? Don’t even think about it!

As a result, the seller can only watch the time passing day by day until the customs auction the goods!

So I gave two methods:

1. Find a very capable freight forwarder. I mean the destination port forwarder. They can help solve some problems. I have a friend who has successfully solved the cargo problem in Turkey.

2. Looking for counselors, some people have succeeded, but most of them can hardly be contacted.

However, today I want to tell you good news that another method has been proven effective in practice.

I suggested that a friend write this paragraph in the contract:

The payment method of this contract is to pay the balance upon seeing a copy of the bill of lading. Suppose the buyer (specific name) has not paid the balance within 10 days of seeing the text of the law of shipping. In that case, it is deemed that the buyer has voluntarily waived the right to the goods, and the buyer agrees to the shipper to dispose of the goods independently.

or:

Suppose the buyer (specific name) fails to pay the payment within ten days of seeing the copy of the bill of lading. In that case, the clause is automatically activated: the buyer (specific name) voluntarily waives the right to dispose of the goods on the ticket, the shipper is free to dispose of it, can be returned, or Resell to any other third party!

Remember, you must ask the customer to sign back!

Many people will say, how can a customer sign it?

If the client is a serious businessman, he did not deliberately lie to you; he will sign it because this is a standard contract clause and does not harm the client’s interests.

Therefore, when the customer has not paid for the goods, the contract will come into effect. The friend gave the deal to the local agent, the agent showed it to the customs, and the Turkish traditions released it.

I don’t know if all customs will recognize this contract model, but since there is hope, it must be 100 points.

Someone may have said, why do you have to pay at the copy of the bill of lading? Wouldn’t it be better to do 100% TT before? Who doesn’t want to do a risk-free business? If you can do the TT, who will make payment at the copy of the bill of lading, who will do the letter of credit, who will do the DP or even the OA?

Due to competition, helpless! It’s like a big brother commenting on my face of slavery because I said that I must express first, and then ask questions, because I said that even if the customer’s information is incomplete, we must first deliver value, and then ask about the specific configuration, if at the very least Foreign trade business can also be regarded as a minion, so are those who accept these non-former TT payment methods also a minion?

Persevere in self and only do TT; adhere to person and only do high value; subscribe to self and wait for customers to take the initiative, and never take action! Maybe this is the real hero, but I can’t do it now. Apart from a few top players, how many people can do it?

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