Consignor vs consignee: Everything you need to know

Consignor meaning the entity or individual who ships the goods. A consignor could be a distribution facility, factory or dropship origin point for goods. It is the consignor who retains the ownership of goods till it reaches the final buyer. They have the right to determine the selling price of goods and negotiate for higher prices if required. 

Initiating Shipping Process

The consignor initiates the shipping process, which includes arranging for the transportation of goods from one location to another. The consignor must communicate with the carrier to stay updated about the shipment. 

 Risk Management 

The consignor manages risk. They must coordinate carefully with the carrier throughout the shipping process and take the necessary steps to mitigate risks related to goods damages, losses, delivery delays, etc. This even includes investing in marine insurance. 

 Document Compliance

The consignor is responsible for complying with regulations regarding the maintenance of shipment documents. This includes properly documenting landing bills and commercial invoices, which are required for swift goods ownership transfer and customs clearance. 

 Customer Satisfaction 

The consignor’s role in successfully fulfilling the shipment process enhances customer satisfaction. They need to foster long-term relationships with customers and make them repeat customers.

 Help in Market Expansion 

Consignors help deliver goods to businesses in various geographical locations, which is ultimately a great way for businesses to expand their market and provide their products to global customers. 

These are some of the crucial rights and liabilities of the consignor as the original owner of goods:

• Retaining Ownership : The consignor has the right to retain the ownership of goods till the buyer receives them, ensuring accountability and control over the shipping procedure. 
• Claim Entitlement : The consignor also holds the right to make a claim against the carrier for the loss or damage to the goods during the transportation, as mentioned in the contract. 
• Seek Legal Resources : If the consignor faces any loss or disputes, then they can seek legal resources against the goods carrier. It helps them leverage the provisions set in the carriage contract. 
• Documentations : The Consignor has the liability to maintain all the documents rightfully. They need to duplicate the consignment note received from the carrier. It acts as proof of the claim settlement process.  
• Regulations and Exclusions : Consignor has the responsibility to read and review the contract regulations and exclusions proposed by the carrier. Most importantly, they must read the rules of maritime shipments and understand consignor rights and obligations clearly. 
• Also Read: DAP (Deliver At Place) Arrival Point: Meaning, Pros and Cons

Consignee meaning the person or party who receives the goods from the consignor. They are the client or customers who take the final ownership of the goods. However, in certain cases, they also act as the middleman appointed by buyers themselves. The consignee could be an individual, company or agent designated by the final buyer or even banks.  

Receiver of Shipments 

 The central role of the consignee is to receive the goods shipped by the consignor. It is one of the crucial roles in the shipment cycle, as the consignee is trusted to take care of the goods carefully. 

Mediator or Final Buyer 

According to the arrangements made, the consignee can either be the final buyer or the intermediary responsible for the goods. In cases where they are the middleman, consignees act as the agent appointed by the final buyer. Thus, they have to oversee all the billing and shipment handling procedures. 

Fulfilling the Clearance Procedure 

Consignees also oversee the clearance process, which includes duty and tax payments, completion of customs formalities and compliance with regulatory requirements. Fulfilling these responsibilities ensures the smooth transfer of goods. 

Transportation Coordination 

Another key role of the consignee is coordinating transportation after receiving the goods. They need to contact a transporter who will carry the goods from the shipment location to the forward location, which might be the consignee’s warehouse or distribution centre. Consignees have to communicate effectively with the transporter so that the goods arrive on time without any damage. 

Proper Document Management 

Consignees are also responsible for keeping all necessary documents with them. This includes the landing bills, shipment contract documents, goods handling instructions, and paper. They must complete all the documents and maintain their accuracy for proper ownership transfer while receiving the goods. 

Here are the rights and liabilities of the consignee in relation to shipment. 

Right to Demand Delivery: The carriage contract of the shipment grants the consignee exclusive rights to demand delivery of goods. It helps them make a rightful claim and possession of the goods on delivery. 

Transfer Rights: Consignee has the right to possess the ownership of the goods after making the complete payment of shipment. 

Claim of Entitlement: If the goods are not delivered or get damaged in transit. Then, the consignee has the right to make a claim against the goods carrier as per the terms of the contract and get compensation for the losses incurred. 

Now that you have understood the consignee vs consignor meaning, let us understand the relationship between the parties through an example. 

Say there is an electronic device manufacturer in Hong Kong, namely X Company. They want to sell their products in India to a retailer, Y. Here, X Company is the consignor because they are the original owner of the shipment. They have to make transportation arrangements and select a carrier. 

Retailer Y in India is the consignee, and they will receive the shipment when it arrives. However, the ownership of the shipment will be transferred from X Company to Y retailer only after the etailer makes the full payment. 

Also Read: FAS (Free Alongside Ship): Meaning

There is no consignor vs consignee in the goods supply and management system. Both must work together to dispatch and retrieve the goods without damage. If all the parties involved fulfil their responsibilities, the whole procedure can be completed. 

Moreover, even though both the consignor and consignee are careful in handling the goods, the marine shipping is full of unknowns. From delays due to bad weather to collisions with other shipments, anything can go wrong. That is why having marine insurance in India is crucial. 

A cargo insurance policy is important for businesses to comply with regulations and laws. It provides comprehensive coverage against theft, loss, delayed deliveries and expenses due to mishaps. Marine insurance protects shipments and provides peace of mind to both the business owner and the customer. 

TATA AIG marine insurance policy has several beneficial features that can help businesses keep their shipment safe and build the trust of customers. It is an investment that businesses may make to avoid big financial losses in future. 

Is the consignee the buyer or a seller? 

The consignee is the buyer of the product shipped by the seller. They are the ones who ultimately receive the product or shipment. 

What is a consignment note?  

A consignment is a document that contains details of the goods being shipped, instructions by carrier and a contract of carriage. 

Are all Consignees buyers?  

Yes, in most cases, consignees are the buyers of the product. However, in some cases, they act as middlemen facilitating trade between exporters and importers.