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In the logistics ecosystem, the two terms – consignor and consignee – are distinct terms and there’s a well-defined relationship between consignor and consignee. During freight shipping, goods often exchange hands and there are multiple third-party service providers involved in the process. Understanding the meaning of consignor (sender) and consignee (receiver), their roles and responsibilities, are therefore vital, to ensure there’s no delay in the supply chain.
On that note, let us look at consignor and consignee meaning, how the two are different, and what’s the relationship between a consignee and consignor.
Who is a consignor?
We begin with the basic question – who is consignee and consignor?
Consignor meaning refers to the person or business that’s sending or shipping the parcel or selling a good. The consignor can be an individual (e.g., you sending a parcel to a friend via courier services) or a business (e.g., the manufacturer/wholesaler/distributor/seller shipping goods). In most cases, the term is used during international freight shipping.
The consignor is gets to ship his parcel through a shipping or trucking company of choice (as the case might be). The shipper is called the carrier. The Bill of Landing (BOL) is issued by the shipping company to the consignor and contains complete details of the shipment. During international shipping, the consignor is the exporter of record. (Also read about DDP in shipping).
Who is a consignee?
Consignee meaning refers to the recipient of the shipment. Customer or client are consignee synonyms, i.e., alternative terms used for a consignee.
It must be remembered that the consignee can be the final buyer (client) or an agent (3PL or 4PL). The consignee is the one who has paid for the goods. Eventually, they will be the real owners. That is, till the sale is complete, the ownership of goods/property lies with the consignor, and the ownership will be transferred only when the payment is made in full. It could be the end customer, retail business owner, or similar.
When 3PLs, 4PLs, and shipping companies are transporting the goods, they are the consignee.
Relationship between consignor and consignee
The next thing we need to understand is the relationship between consignor and consignee. To begin with, all shipments will have details of consignee and consignor. The actual sale of goods is between these two entities – i.e., the consignor and consignee.
A shipping consignment contract involves two parties – the consignor and consignee. The consignor is the seller or principal here. The consignee is the receiver or an agent. The consigner sends the goods to the consignee so that it can be sold to the end buyer on behalf of the sender.
For the carrier – the person/entity receiving the goods is the consignee. It is of little significance if they are the final buyer or only a middleman.
Consignee and Buyer difference:
A consignee may be the final buyer or an agent of the consignor. As an agent, they will facilitate sales and transfer of the goods to the final buyer. The buyer will have to make the payment to the consignee, who keeps a commission and transfers the rest to the consignor, hence completing the transaction and transfer.
Difference between consignor and consignee
As a consignor, you should remember that whether it’s a single or bulk shipping consignment, the duties and responsibilities of the consignor, carrier and consignee do not change. On that note, let’s first understand the difference between consignor vs consignee.
|Sender of the consignment and original owner||Receiver of the consignment (maybe an agent or the final buyer)|
|Retains ownership of the consignment goods till paid completely by the consignee||Gets ownership of the consignment once received and payment completed (if consignee is the final buyer then consignee gains final ownership; if consignee is an agent, then they only receive consignment and facilitate transport/transfer to the final owner)|
|In international shipping, consignor is the exporter of records||In international shipping, consignee is the importer of records|
|Consignor is the seller and can be the manufacturer, distributor, seller, dropship facility etc.||Consignee is the buyer, customer or client and can be a retailer, end-user etc. (The difference between consignee and buyer depends on whether or not a third-party is involved)|
Example of consignor vs consignee relationship
To understand the difference between a consignor and consignee, let us consider a fictional example.
A small handloom company wants to start selling online. It faces initial challenges in taking business online but eventually is able to set up and sign up as a seller on an eCommerce platform. Soon they start receiving orders.
Here, the handloom company is the consignor. The eCommerce company is the consignee and also provides additional services, such as marketing and promotions, fulfilment centres for receiving goods and last-mile delivery services.
They moreover facilitate online payments and provide order ID and tracking number to track order status. The end customer pays online on the eCommerce website, and get tracking and consignment estimated time of arrival details. The eCommerce company keeps its share/commission and transfers the rest to the consignor.
Once the order is placed and payment made, the eCommerce company facilitates the sale. If the goods are already in the warehouse, it follows order picking, packaging and labelling, and transportation to the final buyer. The customer pays online to the eCommerce company, it keeps its share/fee/commission, and transfers the rest to the handloom company.
It’s necessary to remember that payment of goods completes the sale. The consignor retains ownership till payment is done. Once done, the consignee gets ownership, which it can either keep for itself or sell it to a buyer.
Why is consignor and consignee important?
It’s important to understand that transportation can go bad. There can be shipping damages, goods lost in transit, delivery delays and other challenges. In such cases, who’s responsible? Who takes ownership? What are the responsibilities of each stakeholder? Who pays for the duties and taxes in international shipping?
It’s therefore important to define these terms clearly, outlining the responsibilities and terms of service for each. Let’s look at some of the common ones and what they mean.
- Consignee name: The name of the person or entity listed in the Bill of Landing (BOL). This entity/person is the receiver of goods. May or may not be the final buyer, but for the carrier is the person who should be receiving the goods.
- Consignee address meaning: The shipping address of the consignee who will be receiving the goods. Shipping address refers to the address where the goods will be delivered (this is usually used in B2C or eCommerce).
- Consignee not available: This means that the entity or person responsible for collecting/receiving the goods is not present. Unless other instructions are specified, the transporter can leave a message/email/notification with the consignee on date and time of first delivery and what to do next.
- Consignee refused to accept: In such cases, the parcel is sent back to the sender or kept in the transporter’s depot for the consignor to comment. There are charges involves for storage and reverse shipment, which is usually borne by the consignor (or as agreed).
- No such consignee at the given address: This means that the consignee name in the BOL is incorrect. In such a case, the consignor will be contacted.
- Consignee out of station: This means that a delivery attempt was made but the consignee was not present. In most cases, a second delivery will be attempted at a later date.
- Consignee’s address incomplete incorrect: If the consignee’s address is incorrect or incomplete, then the consignor is contacted for rectification. If it’s a basic eCommerce or courier, the delivery partner usually calls the final buyer and delivers, else it is returned to the deport/sender for further instructions.
Consignor and Consignee – Duties and Responsibilities
As can be seen – there can be several instances of the transfer of goods not being completed. In all these cases, there will be questions as to who will bear the expenses of reverse logistics, how and till when will the goods be stored in the warehouse, etc. Having clearly defined duties and responsibilities of each will enable the shipment to happen smoothly without ambiguities on who is to do what, and what steps are to be taken in times of contingencies.
To wrap up here are the main duties and responsibilities on consignor and consignee in shipping:
- Send the goods to the consignee
- Address any queries/questions related to the consignment
- Ensure all documents and paperwork are in place and sent to the concerned parties
- Confirm packaging, insurance (check how to get transit insurance policy), billing and other terms of shipping
- Be present to receive the goods when the shipment arrives
- Inspect goods, quantity and quality, before accepting
- Complete all paperwork required for clearance
- Ship goods to the warehouse and the final buyer as per agreement