Consignee

A consignee is the person or company to whom goods are sent and who is entitled to receive them at the end of a shipment. In ocean shipping the consignee is named in the consignee box of the bill of lading, and the carrier is expected to hand the cargo over to that party, or to whoever holds the document on its behalf, when the ship arrives.

The consignee is one of three core parties in a contract of carriage, alongside the shipper (also called the consignor), who sends the goods, and the carrier, who moves them. The consignee is often the buyer, but it can also be a bank, an agent or a warehouse. It should not be confused with the notify party, whose only role is to be told the goods have arrived, or with the consignee in a consignment sale, who sells goods for their owner.

Think of a parcel sent through the post. The sender writes a name on the label, and the courier will only hand the box to the person whose name is there. The consignee is that name on the label: the party the transport company has promised to deliver to.

International trade adds a twist. A ship can take weeks to cross an ocean, and the goods may be sold again while they are still at sea. So instead of writing a fixed name, a seller can make the label say "deliver to whoever I later point to". The paperwork, not the box, then decides who collects the cargo.

The wording in the consignee box decides how the bill of lading can be used and who may take delivery. There are three common forms:

• A named consignee. The box gives one company's name. This produces a straight bill of lading, which cannot be transferred by endorsement; the carrier delivers to that named party once it identifies itself.
• "To order" or "to order of" a party. The box reads "to order", "to order of shipper" or "to order of" a bank. This produces an order bill of lading, a negotiable document of title that can pass from hand to hand by endorsement, so the final consignee may not be known when the goods are loaded.
• Bearer. A bill made out to bearer, or one endorsed in blank, entitles whoever physically holds it to the goods. Such bills are rare because a lost one can be used by anyone.

Whatever the form, the carrier faces a liability for misdelivery if it releases cargo to someone other than the rightful consignee or holder. Paper bills are increasingly being replaced by the electronic bill of lading (eBL), in which the consignee designation and later transfers are recorded on a platform rather than on paper.

Because the consignee field controls access to the goods, it is central to secured trade payments. Under a letter of credit, the issuing bank often requires the bill of lading to be made out "to order of" the bank itself. The bank is then the consignee in law until the buyer pays or arranges financing, at which point the bank endorses the bill to the buyer. The same idea is used in a documentary collection, where the shipping documents are released to the buyer only against payment or acceptance of a bill of exchange.

In open-account trade, where the buyer pays after delivery, the buyer is usually named directly as consignee, since the seller has already chosen to trust it. Naming a bank as consignee is therefore a sign that the goods themselves are serving as collateral within a wider trade finance arrangement.

A consignee's practical duties normally include presenting the bill of lading or proof of identity, paying any freight or charges still owing, clearing the goods through customs and collecting them within the free time allowed at the port. A freight forwarder or customs broker often does this work. Who bears the cost and risk at each stage is usually settled in the sales contract by reference to Incoterms, and the consignee's details must match those on the commercial invoice and other documents.

The consignee's right to sue the carrier for loss or damage depends on national law. In the United Kingdom the Carriage of Goods by Sea Act 1992 transfers contractual rights of suit to the lawful holder of a bill of lading. In the United States, bills issued for shipments from US ports or between states are governed by the Federal Bills of Lading Act of 1916, often called the Pomerene Act, while carrier liability for ocean cargo is set by the Carriage of Goods by Sea Act of 1936.

The consignee is the party entitled to delivery from the carrier. The notify party is merely the contact the carrier informs on arrival, often the buyer's agent or broker. The importer of record, a US customs term, is the party legally responsible for declaring the goods and paying duties; it is frequently the consignee, but need not be. In a consignment sale, a different meaning applies: the consignee is a dealer or retailer that holds goods owned by the consignor and pays only once they are sold.

Consignee details also matter for compliance. Banks, carriers and forwarders check named consignees and end users against sanctions lists as part of sanctions screening, and unusual consignee patterns, such as a shell company far from the stated destination, are a known warning sign of trade-based money laundering.

• International Chamber of Commerce: Incoterms rules
• U.S. Customs and Border Protection