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Consignor vs consignee: Everything you need to know

A consignor is the owner of commodities, while a consignee is the recipient of goods being exported. Learn more about the differences between them in this blog.

In international shipping, consignors and consignees are two important parties that every trader needs to be aware of. Both of them are significant aspects of the logistics ecosystem.

What was the Rubber Act 1947?

A consignor is the owner of goods that are sent to a consignee to be sold to a third party or buyer. The entity sending the goods is known as the consignor. A consignor might be a factory, distribution facility or dropship origin point. When exporting, the exporter of the record usually is the consignor.

The consignor retains ownership of goods until they are sold to the end customer. The consignor is also usually in charge of determining the selling price of the goods. They may also have the option to negotiate a higher price in some situations¹.

Who is a consignee?

A consignee is the recipient of goods being sent. The consignee is generally an importer in international shipments and is in charge of selling goods and subsequently transferring ownership to the buyer. Regardless of whether the goods are being sold and acquired or merely moved from one party to the other through a consignee, ownership remains in the hands of the consignor until the agreement is finished – either through payment or delivery to the buyer.

What is a consignment?

Consignment is the procedure through which a person passes over something to the care of another party, keeping full ownership until goods are sold. It is frequently used at auctions, shipping, transferring goods or any other case where something is being placed for sale not by the owner but by a third party who will make the property accessible to a buyer. Consignment is a way of selling products in which the seller commits to sell things on behalf of the owner and is only paid if and when the goods are sold.

Difference between consignor and consignee

Some of the key factors differentiating the two terminologies are²:

· A consignment always has a consignor and a consignee in paperwork written out by the carrier or transporter.
· The sender of a consignment is known as the consignor, while the recipient is known as the consignee.
· The contract of transportation is between the consignor and the carrier, whereas the contract of sale is between the consignor and the consignee.
· The consignee may be a buyer or just an agency acting on behalf of the consignor.
· The consignor retains ownership of the products or consignment until the items are paid for in full by the consignee.

Example of consignor and consignee

A family is trying to sell its valuable collection of books. They establish a deal with an auction house to sell this collection. In this case, the family is the consignor and the auction business is the consignee. The auction house sells books, but the family retains possession until a third party buys them. Once payment is received—from the third-party buyer to the auction house—the money is handed to the consignor. Ownership is subsequently transferred to the buyer.

The consignor and the consignee are both major parties involved in a transportation process. While the consignor is in charge of goods until they are delivered to the consignee, the latter is in charge of accepting cargo and assuming ownership of the commodities. While understanding these terms are important, exporting and shipping from India has become easier and simpler with the support of e-commerce exports programs and its tools.

The above-mentioned example has only been used to explain the concept.

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Frequently Asked Questions

Is the consignee the buyer or a seller?

A consignee is usually the buyer of goods. However, in a few cases, they are intermediaries that assist the transaction between exporters and importers.

Is a consignor a shipper?

Usually, ‘shipper’ and ‘consignor’ are the same individual or entity.

What is a consignment note?

A consignment note is a document that contains details about goods being shipped, contract of carriage, and instructions issued to the carrier.

What is the difference between shipper, consignor and carrier?

Shipper: The person who ships goods.
Consignor: The person in charge of delivering goods.
Carrier: The person in charge of transporting packages until they arrive at their destination.

Published on December 29, 2022.

Sources:
1. https://corporatefinanceinstitute.com/resources/accounting/consignor-vs-consignee/
2. https://www.csatransportation.com/blog/consignee-consignor-meaning-shipping
3. https://www.accountingtools.com/articles/the-difference-between-consignor-and-consignee.html
4. https://www.freightcourse.com/what-is-a-consignment-note/
5. https://www.txintlfreight.com/faq-article/difference-shipper-carrier/#:~:text=Shipper%20is%20the%20person%20or,of%20the%20goods%20during%20transport.

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