In the world of international trade, the flow of goods from one country to another often involves multiple parties beyond just the exporter and importer. One such player is the Intermediate Consignee—a third party who plays a vital role in facilitating the smooth transit of goods across borders. Their involvement, although sometimes overlooked, is crucial in ensuring compliance with various international regulations and in helping goods reach their final destination without unnecessary delays.
Defining the Intermediate Consignee
An Intermediate Consignee is an entity or individual that temporarily takes possession of goods during the shipping process but is not the ultimate end user or final recipient of the goods. They are located abroad and act as an intermediary between the exporter (or shipper) and the Ultimate Consignee (the final recipient or buyer of the goods). Their primary responsibility is to ensure that the goods move seamlessly through the supply chain, especially in situations where direct shipment from the exporter to the end user is not possible or practical.
As defined in the Foreign Trade Regulations (FTR) Section 30.1:
The intermediate consignee is the person or entity in the foreign country that acts as an agent for the principal party in interest with the purpose of effecting delivery of items to the ultimate consignee.The intermediate consignee may be a bank, forwarding agent, or other person who acts as an agent for a principal party in interest.
In a series of blog posts explaining the Ultimate Consignee, the U.S. Census Bureau clarified that an Intermediate Consignee must take possession of the goods. Also, they must be located abroad but not necessarily in the same country as the Ultimate Consignee.
Are They an Intermediate or Ultimate Consignee?
- If the Foreign Principal Party in Interest (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, not the Intermediate 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.
- In a drop shipment where the FPPI pays for the export but does not take possession, the FPPI would not be an Intermediate Consignee.
Common Roles and Responsibilities of an Intermediate Consignee
- Temporary Possession of Goods: The Intermediate Consignee, located abroad, receives the goods at some point during the shipping process, typically to inspect, consolidate or transfer the shipment to another carrier or mode of transport. This is common when shipments involve complex routes or multiple transportation methods, such as a combination of air, sea and land.
- Consolidation and Deconsolidation: When multiple shipments need to be consolidated into one container to reduce shipping costs or comply with transportation regulations, the Intermediate Consignee may perform this task. Conversely, they may also break down large shipments into smaller ones for delivery to different end users.
- Freight Forwarder or Customs Broker: Depending on the complexity of the shipment, Intermediate Consignees may be responsible for handling customs clearance in the transit country. They ensure that all necessary documentation—such as commercial invoices, certificates of origin and export licenses—are in order and that the shipment complies with international trade laws.
- Distributor or Wholesaler: Sometimes, a distributor or wholesaler acts as an Intermediate Consignee, receiving the shipment and then forwarding it to the Ultimate Consignee. However, if they alter the goods or add significant value, they may become the Ultimate Consignee instead.
Why Use an Intermediate Consignee?
There are several reasons an exporter might rely on an Intermediate Consignee:
- Geographical Constraints: If the destination country lacks direct transportation routes, or if direct shipment is uneconomical, using an Intermediate Consignee can help reroute goods through a country with better logistical connections.
- Compliance with Trade Regulations: Intermediaries can help ensure compliance with trade laws abroad, especially when shipping sensitive products.
- Reduce Shipping Costs: In some cases, consolidating shipments through an Intermediate Consignee can significantly lower transportation costs. By pooling smaller shipments together, companies can take advantage of lower freight rates for full containers or bulk shipments.
- Supply Chain Flexibility: Using an Intermediate Consignee can increase the flexibility of the supply chain, making it easier to reroute shipments in response to changing customer needs, geopolitical issues or transportation delays.
Reporting the Intermediate Consignee in AES
When filing your Electronic Export Information (EEI) in the Automated Export System (AES), you should report the Intermediate Consignee if one is involved in your transaction. This data is described as “conditional” in FTR Section 30.6. (Conditional data “shall be reported if they are required for or apply to the specific shipment.”) The FTR states:
The name and address of the intermediate consignee (if any) shall be reported. The intermediate consignee acts in a foreign country as an agent for the principal party in interest or the ultimate consignee for the purpose of effecting delivery of the export shipment to the ultimate consignee. The intermediate consignee is the person named as such on the export license or authorized to act as such under the applicable general license and in conformity with the EAR.
According to Census, “the Intermediate Consignee would only be a reporting requirement if for a specific shipment there exists an Intermediate Consignee, a person or entity located abroad who acts as an agent for the principal party in interest and takes possession of the goods for the purpose of effecting delivery of goods to the Ultimate Consignee.”
Simplify Compliance and Documentation
As an exporter, understanding who the Intermediate Consignee is in your international transaction is the first step toward compliance. Shipping Solutions helps make this process easier by streamlining your export documentation and ensuring that all required forms are correctly completed. With Shipping Solutions, you can determine which documents are necessary for your shipment, easily generate commercial invoices, bills of lading, and certificates of origin, and check to see if your product requires an export license. Also, you can file through AES with the click of a button, ensuring that details like the Intermediate Consignee are correctly recorded, minimizing the risk of non-compliance. We’d love to show you how it works.
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