This question in from a reader.
My friend recently shipped Bananas from the Philippines to the middle east by CNF. The middle east buyer has not shown up to pick up the goods from Customs. The container of Bananas is presently being held by Customs. The goods have not been “Seized” by customs. Since he shipped CNF does he bear any legal responsibility? If the buyer does not pick up the goods (which have been fully paid for) what happens to the goods? Are they sent back to the Phillipines and destroyed? I suspect that the buyer has not paid the import tax, so customs is holding the container.
Unfortunately, I am an expert in U.S. regulations, not so much Middle East nation’s import regulations. If someone reading this is, please feel free to comment.
I would say, however, that one should not necessarily equate Incoterms with responsibilities to Customs authorities. Incoterms help establish at what point in the shipment the responsibility for shipping cost and liability for loss passes from the shipper to the consignee. They do not, as some mistakenly believe, establish at what point title passes. Nor do they, as in our reader’s case, establish who is responsible to Customs at destination.
Even in the case of DDP, where the shipper pays for transport, insurance, Customs formalities, and delivery all the way to the consignee’s door, some nations do not allow the shipper to be a non-resident importer, as is allowed in the U.S.
So, not knowing which Middle East county is involved, nor being an expert in that as yet unknown country’s import laws, here are my thoughts. If the terms are CFR (superseded CNF recently), then the seller’s responsibility for loss ended when the bananas were off-loaded from the importing carrier, which they obviously have if Customs is holding them. It’s not the shipper’s problem, unless Customs there as laws to the contrary. Furthermore, I would argue that the seller has fulfilled their obligation to the buyer and deserves to be paid, even if bananas rot.
Image by Martin Wiesheu