As a U.S. exporter, understanding the concept of the Ultimate Consignee is crucial for ensuring compliance with the Foreign Trade Regulations (FTR) and the proper filing of Electronic Export Information (EEI) in the Automated Export System (AES). Identifying the Ultimate Consignee can be complex, especially when an end user and the Ultimate Consignee are different entities, residing in different countries. Based on guidance from the U.S. Census Bureau’s Trade Regulations Branch, this article will help you identify the Ultimate Consignee in some of the different scenarios you might face as an exporter.
Identifying the Ultimate Consignee in Your Export Shipment
According to FTR Section 30.1, the Ultimate Consignee is defined as “the person, party, or designee that is located abroad and actually receives the export shipment. This party may be the end user or the Foreign Principal Party in Interest (FPPI).”
FTR Section 30.6(a)(3) specifies that the Ultimate Consignee must be reported in the EEI as known at the time of export. For shipments requiring an export license, the Ultimate Consignee reported in AES must be the person designated on the export license or authorized to be the Ultimate Consignee under the applicable license exemption or exception in conformance with the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR).
Common Scenarios Involving the Ultimate Consignee
Use the following examples to understand who the Ultimate Consignee is in your export transaction.
1. Straightforward Sale
The simplest scenario occurs when the U.S. Principal Party in Interest (USPPI) or U.S. seller sells goods to a foreign buyer, or FPPI, who directly receives the goods for consumption. In this case, the FPPI/foreign buyer is the Ultimate Consignee.
2. FPPI as a Reseller/Distributor—Country of Destination Unknown
When the FPPI intends to resell or distribute the goods and does not disclose the end user (for competitive reasons, for example) the USPPI reports the FPPI as the Ultimate Consignee and the Ultimate Consignee Type as reseller/distributor. The USPPI should demonstrate that they’ve done their due diligence by requesting the name and address of the end user from the FPPI, but the FPPI might not disclose this information.
3. FPPI as a Reseller/Distributor—Country of Destination Known
When the FPPI intends to resell or distribute the goods and HAS disclosed the country of the end user, the USPPI reports the FPPI as the Ultimate Consignee, the Ultimate Consignee Type as reseller/distributor, and the known country of the end user as the Country of Ultimate Destination.
4. Drop Shipment/Routed Export Transaction
A drop shipment scenario often involves an authorized agent who facilitates the export and prepares and files the Electronic Export Information (EEI) on behalf of the FPPI/foreign buyer. The FPPI/foreign buyer may also authorize the USPPI to ship the goods directly to the end user and file the EEI.
In these routed export transactions, the FPPI/foreign buyer instructs either the authorized agent or the USPPI to deliver (“drop”) the goods to a foreign party located abroad who is different from the FPPI/foreign buyer. The foreign party who actually receives the goods is the Ultimate Consignee. Although the FPPI/foreign buyer pays the USPPI for the goods being exported and selects the authorized agent/USPPI to file on its behalf, the FPPI/foreign buyer will not be shown on the EEI in AES, as the goods are being shipped directly to the Ultimate Consignee.
If, in a routed export transaction, the FPPI names a third-party logistics (3PL) company as the Ultimate Consignee, the AES filer should report the Ultimate Consignee using the name of the FPPI and the address should be in care of the 3PL. Watch for red flags in this scenario!
5. Intermediate Consignee
If the FPPI simply passes the goods to the end user without altering them, the FPPI is an intermediate consignee, and the end user is the Ultimate Consignee. If the FPPI stores the goods in inventory to be shipped at a later date, the FPPI remains the Ultimate Consignee, because there is no guarantee the goods will actually be shipped later.
If the FPPI makes a change to the goods or adds value, the FPPI is the Ultimate Consignee because the altered goods are not the same goods in the transaction from the U.S. Adding something that changes the Schedule B classification means the FPPI would be the Ultimate Consignee. Different packaging is not considered a material change.
An intermediate consignee must take possession of the goods to effect delivery to the Ultimate Consignee, so, in a drop shipment where the FPPI pays for the export but does not take possession, the FPPI would not be listed in the intermediate consignee field.
Reporting Requirements for Exports Requiring a License
For exports that require a license under the EAR or ITAR, still use the scenarios above to determine who the Ultimate Consignee is when reporting EEI in AES. CBP explains that this can be confusing because most licenses include entries for the purchaser, intermediate consignee, Ultimate Consignee and end user, but AES does not have entries for purchaser or end user. The differences in documentation are acceptable because the note to FTR 30.3 says that “due to the differences in export reporting requirements among federal agencies, conformity of documentation is not required in the FTR.” Different requirements in the EAR, ITAR and FTR mean that there may be differences in your documentation.
By understanding who the Ultimate Consignee is in your export transaction, you’ll avoid fines, delays or even the seizure of your shipment.
This article is based on information from a series of blog posts from the U.S. Census Bureau.
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