One of the notable negative effects of the COVID-19 pandemic is the alarming number of cases and the rate of cargo abandoned. Global activities are unpredictable and some people are making a conscious decision not to proceed with shipments if they feel the outcome will not be positive. Meanwhile, the shipping industry must find a way to address this problem. Things are not made easier by staff shortages that affect operational capabilities.
Although death rates have stabilized somewhat or even decreased in the developed world, COVID-19 continues to disrupt and potentially destroy everything in its path. The shipping industry depends on human labor. Workers die and get sick. Others are too scared to go to work. Then there are those who have decided during the lockdown that shipping is no longer an option for them.
In other words, the shipping industry must find unique solutions to problems that have landed right on its feet. Consumers have responded by becoming even more unpredictable than unusual. A shipment that was ordered can be abandoned at any time when the recipient becomes nervous. Shipping and shipping cancellations are another major issue that makes long-term planning nearly impossible.
How the pandemic has increased abandoned cargo rates
Although cancellations were always part of the shipping business model, it’s getting worse. Cancellations can be irritating when it comes to perishable items that will soon lose their value. Some consignees are abandoning their cargo due to bankruptcy, another consequence of the devastating impact of Covid-19 on local and global economies. Then there are the carriers and logistics agents who have not yet assumed their administrative responsibilities. This means that the load is not properly cared for and is not picked up at the right time.
Customers can be fickle at best, but COVID-19 has made them more cautious about spending when they don’t know when and how their next paycheck will arrive. Assets that were ordered in the hope of earning income may be abandoned when that hope is compromised. Thousands of abandoned cargo cases are piling up and the shipping industry is struggling to deal with the consequences.
Sometimes the industry is caught in the middle when there is a dispute between the customer, the courier and the end customer about the quality of the cargo. On top of all this chaos is a superstructure of customs officials who can change import rules, meaning the cargo is no longer viable. At other times, the lines are blurred so that the industry is unclear if the cargo is really abandoned or if someone is behind schedule somewhere.
Technical definition of abandoned cargo
The guidelines provided by the Federation of Freight Forwarders Associations (FIATA) indicate that cargo is abandoned if the recipient does not pick it up within a specified period. This period may vary from port to port and from country to country. The courier or logistics company may not be able to decipher the true intentions of the recipient. Hence the need to choose an objective measure in terms of the length of stay and the nature of the burden.
Other cases arise because it is difficult to identify who or what the cargo is intended for in terms of delivery. Then there are cases where efforts are made to contact the recipient to no avail. India is an example of a country that has a short waiting period of one month before cargo is classified as abandoned. Other countries can be as lenient as a quarter of a year for the abandoned cargo rate.
Abandoning the load is not an economical option. It means that the shipping lines are loaded with port and storage fees. Freight forwarders are then harassed into paying these fees. If they can, freight forwarders will pass the buck to the recipient. However, in most abandonment cases, that recipient is nowhere to be found, so this can be a moot point.
Over time, costs continue to rise, including disposal charges, if that’s the case. Additionally, there is the operational burden of sorting, sorting, and curing all of these abandoned load cases. The agent named on a bill of lading will likely receive the majority of the invoice. That is why some shipping arrangements require advance payments and deposits from the customer that can be applied to these costs in the event the cargo is abandoned.
How to avoid significant losses due to abandoned cargo
The best options to prevent cases of abandoned cargo are to react quickly to information and notifications. Make sure contracts are well considered and monitored in case people are held accountable. Improved communication means that people are informed in time to avoid additional costs. Assign the right responsibilities to the right people at the right time.
Options to deal with abandoned upload rate
There are several options available when it comes to abandoned cargo. Whichever option is selected, it is imperative to have records and ask customs for permission. All reminders and notifications should be retained in the event that it is disputed by either party.
1. Resell the products to a third party
If there is a third party who is willing to buy the cargo, it is wise to sell it rather than face mounting costs.
2. Resell and re-export
You can also resell or re-export abandoned cargo to a location where someone is willing to buy the cargo for a price that covers all costs.
3. Return to consignor
Sometimes the shipper is willing and able to retrieve the merchandise, subject to an agreement with the carrier on refunds.
4. Auction abandoned goods
Sometimes, Customs authorizes auction of abandoned cargo under its auspices and supervision.
5. Offer as a donation to any charitable cause
Abandoned cargo can be donated to charities to clear the space and raise the profile of the shipping company.
Customs may authorize the destruction of the cargo under its supervision.
Abandoned cargo is a major issue in this era of COVID-19 when revenues are unstable. Other causes include administrative failures along the shipping chain. Various options can be explored, including: resale, re-export, return to sender, auction, donation, and destruction. Preventive measures include responsive administrative processes with a clear trail of responsibilities throughout the shipping chain. Good communication also helps clear up misunderstandings and missing information.