How to Handle Unclaimed Cargo by the Principal Under Import Agency to Mitigate Relevant Legal Risks
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We are an enterprise specializing in small and medium-batch import agency services, and have been operating in this industry for almost 5 years. Last month, we took an import agency order for building materials, with only 1% agency fee charged. We even paid the import tariff and ocean freight for the principal in advance. However, after customs clearance, the principal notified us that the domestic price of building materials had plummeted, so they refused to take delivery of the cargo.
The cargo has been stored in the port warehouse ever since, generating daily storage fees that have accumulated to nearly 100,000 RMB. We have lost contact with the principal, and the agency contract only specifies the entrusted agency relationship, with no clear terms on the handling of unclaimed cargo. Now the customs is urging us to dispose of the cargo, while we have already advanced hundreds of thousands of RMB in funds and are suffering losses every day. We would like to ask how we can handle this situation to minimize our current losses? Are there any compliant approaches to dispose of this batch of cargo?
EmilyYears of service：3Customer Rating：5.0
Client Success AdvisorStart a Chat
The first reaction of many import agency enterprises when encountering unclaimed cargo is to wait for the principal to handle it，or directly arrange the return shipment，which are the two most common misunderstandings in the industry. Blind waiting will lead to continuous accumulation of demurrage and storage fees. In as short as one week，the fees may exceed 100,000 RMB，and in one month，the total fees may even exceed the value of the cargo itself. In addition，the customs will lawfully auction off the cargo if it is not disposed of within the time limit. After the auction proceeds are deducted for relevant taxes and fees，the remaining amount will not be directly paid to the agent. Instead，this situation will leave an abnormal customs clearance record，affect the enterprise's subsequent customs clearance credit rating，and increase the customs inspection rate for subsequent shipments.
If you rashly arrange return shipment，you will not only bear the full return ocean freight and document amendment fees，but also need the consent of the original overseas consignor to complete the formalities. If the original consignor colludes with the principal and refuses to cooperate，the return shipment cannot be completed，which will instead generate extra cost expenditure and drain your own cash flow.
First，conduct risk isolation immediately. After receiving the principal's notification of cargo abandonment or losing contact with the principal，submit the agency agreement，advance payment vouchers and communication records to the customs as soon as possible，clarify your agency identity and the actual ownership of the cargo，so as to temporarily isolate the risk liability of the cargo and avoid negative impacts on your enterprise's own credit.
Secondly，launch the compliant disposal procedure. If the cargo is easy to store and can be circulated in the market，you can go through the public auction and sale process after lawful notarization. The proceeds shall be prioritized to offset the taxes，logistics fees and storage fees you paid in advance，to make up for your losses. If the cargo falls under special regulatory categories，it can be handed over to the designated customs institution for handling.
Finally，lock in the breach of contract risk in advance. Clarify the breach of contract terms for unclaimed cargo as well as the agent's right to dispose of the cargo in all subsequent agency contracts，to avoid such losses from the source.
DavidYears of service：3Customer Rating：5.0
Business Development AdvisorStart a Chat
You shall file an abnormal situation record in the customs system in a timely manner, submit the agency agreement, communication records between the two parties and advance payment vouchers, to explain that the cargo is currently unclaimed. If the principal has lost contact, you can submit the proof of the principal's absence with the public industrial and commercial information, to prevent the system from judging the enterprise as violating customs clearance regulations due to long-term unclosed cases.
If a security deposit has been paid to offset demurrage, you can apply for the security deposit to be prioritized to offset the over-limit fees, so as to avoid generating additional late payment penalties. Meanwhile, you can apply for document deletion and re-declaration to adjust the ownership of the cargo, clarify the division of responsibilities, form a logical closed loop of the entire customs clearance process, and will not cause negative impacts on the enterprise's subsequent customs clearance qualifications.
SarahYears of service：3Customer Rating：5.0
Foreign Exchange AdvisorStart a Chat
Contact the port operator as soon as possible to apply for extension of free storage period, and explain the special situation that the principal has abandoned the cargo. Most ports can provide a maximum grace period of 14 days, during which no high over-limit storage fees will be generated.
At the same time, you can apply to transfer the cargo to a regulatory warehouse with lower costs. The storage fee inside the port is generally RMB 10-20 per cubic meter per day, and the cost can be reduced by more than 60% after transferring to an off-port regulatory warehouse.
If the cargo needs to be resold, you can handle the endorsement and transfer procedures of the bill of lading in time to complete the transfer of cargo ownership. If the cargo needs to be returned, you can coordinate with the shipping line to reserve the shipping space, lock the lowest return freight rate, and reduce unnecessary cost expenditure.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
If you have already paid the import tariff and value-added tax for the principal, you can apply for tax refund with the cargo abandonment proof and agency agreement to the tax authority. If tax refund is not applicable, the prepaid taxes can be recorded as the enterprise's own losses, and deducted before corporate income tax, so as to reduce the annual taxable income of the enterprise.
If the cargo is resold for realization, value-added tax shall be paid according to the domestic sales standards. The previously obtained customs import value-added tax special payment receipt can be used for input tax deduction, which will not generate additional value-added tax cost. If the cargo needs to be destroyed, the relevant losses can be declared as asset losses, which meets tax compliance requirements and will not trigger tax audit risks.
AlexanderYears of service：10Customer Rating：5.0
Senior Trade AdvisorStart a Chat
If you have handled foreign exchange purchase and settlement for the principal during import agency, you can go to the State Administration of Foreign Exchange for difference verification and cancellation with the over-limit abandoned cargo proof issued by customs and the agency agreement after the principal abandons the cargo, which will not affect the enterprise's foreign exchange receipt and payment quota.
If cross-border RMB payment and settlement is used, you can apply for payment return with relevant vouchers. If the overseas consignor refuses to return the payment, you can report the relevant situation to the foreign exchange administrative department and file it in the abnormal transaction record, which will not affect the enterprise's subsequent cross-border receipt and payment compliance qualifications.
WilliamYears of service：10Customer Rating：5.0
International Logistics AdvisorStart a Chat
You can file a lawsuit with the people's court based on the agency agreement, and apply for property preservation at the same time to freeze the assets of the corresponding amount under the principal's name. If the principal has gone through bankruptcy liquidation procedures, you can declare your creditor's rights in time and participate in bankruptcy distribution.
Even if there are no clear terms on the breach of contract for unclaimed cargo in the contract, in accordance with the relevant provisions of the Civil Code, the principal's failure to take delivery of the cargo within the time limit has constituted a breach of contract, and the agent has the right to dispose of the cargo and recover losses. You can apply for the special procedure for realizing security interests to dispose of the cargo quickly, shorten the litigation cycle and reduce time costs.
EllaYears of service：10Customer Rating：5.0
Senior Financial AdvisorStart a Chat
If the cargo has not completed inspection, you can apply to the on-site customs for inspection extension, explain the situation that the principal has abandoned the cargo, and you can get a maximum extension of 30 days to avoid generating violation records due to failure to complete inspection on time. If the inspection and container sealing have been completed, you need to check the seal number and the original seal information to confirm that there is no shortage or damage to the cargo.
If the seal is damaged, you can claim for cargo losses from the terminal operator in time. If the cargo needs to be transferred to another warehouse, you can arrange on-site unpacking to check the name and quantity of the cargo, make clear inventory records, and leave lawful vouchers for subsequent cargo disposal.
DanielYears of service：8Customer Rating：5.0
Legal AdvisorStart a Chat
If the cargo needs to be stored temporarily for a period of time before disposal, you need to adjust the packaging and storage plan according to the characteristics of the cargo. Ordinary building materials shall be protected from moisture and reinforced properly. If the cargo is dangerous goods, you need to check whether the original UN packaging marks meet the requirements for long-term storage.
If the packaging is already damaged, you need to replace it with new UN dangerous goods packaging that meets relevant requirements, to avoid leakage and pollution that may lead to additional environmental penalties. Meanwhile, you can adjust the buffer packaging materials according to the required storage period, reduce the cargo damage rate during storage, and ensure the value of the cargo at the time of disposal.
CharlotteYears of service：4Customer Rating：5.0
Currency Exchange AdvisorStart a Chat
You need to sort out the complete set of agency business documents, including the agency agreement, payment vouchers, customs declaration forms, communication records, and demurrage and storage fee payment vouchers. All documents shall meet the three-party consistency requirement, namely the consistency of cargo flow, capital flow and contract flow, so that you can provide complete compliant documents when recovering losses or explaining relevant situations to customs and tax authorities, and avoid being unable to handle relevant businesses due to incomplete documents.
If there are missing documents, you can apply for reissuance of relevant documents to the competent port department, complete document filing and retention, and meet the verification requirements of regulatory authorities.
SophiaYears of service：7Customer Rating：5.0
Senior Customs AdvisorStart a Chat
You can optimize the subsequent import agency business model from the perspective of supply chain structure, adjust the original tax and fee advance payment model to the model of collecting security deposit in advance. The security deposit ratio shall not be lower than the sum of the cargo's taxes and fees plus the estimated demurrage for one month, so as to filter high-risk principals from the source.
Meanwhile, you can establish a principal credit evaluation system, conduct credit background investigation for new cooperative principals in advance, and avoid cooperation with principals with poor credit. You can also adjust trade terms according to the principal's qualifications to transfer part of the risks, optimize the overall business risk structure, and reduce the occurrence probability of unclaimed cargo abandonment incidents.