675 - 01/10 - Failure to Collect Cargo Problems - Ukraine

The Association has recently faced problems in the Ukraine with consignees failing to collect cargo. The following advice, on the matter, has been received from the Club's correspondent in Odessa.

Container lines often face a problem of the delay or failure of consignees to collect cargoes. Due to the recent financial crisis more Ukrainian consignees have become unable to pay and their goods remain stuffed in the containers. At present 400 to 500 containers, with uncollected goods, occupy storage space in the container terminals of Odessa Port.

According to the provisions of most bills of lading if the Consignee fails to take delivery of the goods within a certain period of time (usually - 30 days) from the date of expiry of agreed storage time the Carrier may sell, destroy or dispose of the goods and apply any proceeds of sale in reduction of the sums due to him from the cargo owner.

Under Ukrainian law the Carriers cannot simply pass the cargo to an auction company for public sale. They shall declare a lien, discharge the cargo to a customs warehouse for responsible storage and then dispose of the goods as per the procedure provided for pledged property.

In particular the carriers shall apply to the court with a claim against the Consignees and obtain a relevant decision following which the cargo will be sold at public auction by State Enforcement Service of Ukraine. The length of the whole procedure is 3-4 months. The costs include destuffing of the containers, storage of goods at customs warehouse, legal fees and expenses, cost of auction (10-14% of sales price) and fees of State Enforcement Service (10% of sales price).

If the Carriers do not linger accepting numerous promises of the Consignees and sell the cargo within 2-3 months from the time of delivery, whilst storage costs are relatively small, they have all chances to release the container(s) and recover storage and demurrage for account of the cargo.

In practice however the Carriers realize that something has to be done after the containers have stayed in the port for 6 months to several years and they owe USD 50,000 to 250,000 to the port for storage. As a rule by that time many cargoes become worthless and chances to release the containers get smaller every day.

The remaining options to release the containers are:

1. Make a declaration on abandoned cargo to the port and let port authorities dispose of it;

2. Destroy the cargo;

3. Take the container with cargo back on the vessel and deliver (re-export) the same to another country for disposal or destruction.