What is a Consignment, Consignee and Consignor

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Exporting and Importing can often be an extremely complicated and mundane process as there are so many rules, regulations as well as countless  number of procedures to adhere to. This, many a times, may require to prepare and submit documents for import and export. Usually, freight forwarders would prepare it  for us, but it is also good to know for ourselves as to how to complete the relevant documents by understanding what the terms mean. As such, in our new article series titled “Export Terms”, we would  introduce you to all the various terms used in the international trade, be it through air, land or sea freight. We would roll out one related article on a regular basis, which would help you to get a comprehensive understanding as to the document preparation for the purpose of doing trade internationally.

What does a Consignment mean?

There are actually two meanings as to the term ‘consignment’. Both meanings are relevant to trade. Consignment could basically mean a specific shipment that is destined to be delivered to someone. In other words, it is basically a term that is used to address a batch of goods slated for shipment.

The other meaning of consignment is related to the making of payment. If someone asks you if he could buy your products on consignment, what he actually means is that he would like to have your products first, but will only pay after the products have been sold. The is known as a ‘ consignment sale’. The seller of the products (which is you in this case) still hold ownership of the goods and therefore, have the power to take back the products after the amount owing has been repaid after a period of time.

What is a consignee then?

A consignee is an identified party, which is typically referring to the buyer. The seller, is the consignor and he names the consignee. After the Consignee (buyer) has paid the sales invoice in full for the consignment (goods), the ownership therefore transfers from the seller (consignor) to the buyer (consignee).

As such, when the consignment arrives in the port of destination, the consignee would be responsible for the formalities that is required by the local customs and declaration.

How about a Consignor?

After reading what a consignment and a consignee is all about, you would have probably understood that the seller is the consignor. The consignor is basically the seller who holds the ownership to the consignment (goods) up until the point of time where the consignee (buyer) pays in full. The responsibility of the consignor is to make sure that the consignment gets delivered to the port of destination.

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