Most import shipments get delivered as planned, to the importer or the importer’s customer. Occasionally, though, there is a mis-communication or other issue that delays or prevents timely customs clearance. What happens then?
To keep uncleared cargo from clogging up US ports, Customs limits the time a shipment can sit at a customs bonded cargo facility without being either cleared, or moved to another bonded facility. For most types of import shipments, goods that have not been cleared (or at least had an entry filed) within 15 days after arrival at port become eligible to be sent to the US Customs “General Order” (or “G.O.”) warehouse, as unclaimed cargo.
Most major US ports have at least one General Order warehouse, and at least one General Order trucking company, each of which is operated by a private sector contractor approved by US Customs. At about the time a shipment is delivered to General Order, any interested party which is owed money for any services performed “for account of cargo” will normally issue a lien against the shipment, which is filed with both US Customs and the G.O. warehouse operator. These liens typically cover such items as:
* unpaid freight charges (including both “prepaid” and “collect” charges not yet collected by the carrier and/or carrier’s agents)
* unpaid warehouse, CFS, or air cargo ground handling agent charges for ISC, trucking, storage, handling, administrative overhead, and other costs
* the G.O. trucking company’s “cartage” charges for moving the shipment from the original bonded cargo facility, to the G.O. Warehouse
* work already done “on behalf of the cargo” by a customs broker, freight forwarder, testing laboratory, or other interested party (including advancing funds for costs and charges billed by still other parties), but not yet paid for
At US Customs’ discretion, goods that are eligible for G.O. but are perishable, hazardous, or of very low value may be destroyed instead of being sent to the G.O. warehouse.
The G.O. warehouse operator usually charges for its services by billing an administrative overhead charge, as well as a monthly storage charge, for each G.O. shipment. Storage charges billed by G.O. warehouses are typically much higher than general warehouse charges for similar cargo – often around three times the usual rate. (One reason for this higher rate is that, for every G.O. shipment the warehouse handles, it is taking a risk that the warehouse will never be paid for its services, even after a shipment has been sold at a G.O. auction.)
After a shipment has been received at the G.O. warehouse, it will typically be held there for up to six months. During this period, it can still be cleared through customs by or on behalf of the consignee, but all accrued charges (including liens) must be satisfied before the cargo can be released from the G.O. warehouse.
If the cargo is still unclaimed (and uncleared) after this period, it is sent to one of the auction locations operated by still another US Customs private sector contractor. (G.O. shipments from most West Coast ports are normally sent to the G.O. auction site in the Los Angeles area.)
When goods are sold at a US Customs General Order auction, the buyer is responsible for either:
* clearing the goods through customs, at the buyer’s own expense (including payment of any applicable customs duty and fees); or
* exporting the goods under customs bond, especially if the goods are cannot be cleared through customs for any of several reasons.
After goods are sold at a G.O. auction, the buyer’s payment is applied to paying, in a standard order of priority, expenses and liens including:
* expenses of sale, including advertising and auctioneer’s charges
* transport from G.O. warehouse to G.O. auction site
* G.O. warehouse administrative, storage, and any other applicable charges
* G.O. cartage charges
*liens filed against the shipment against the shipment by carriers, warehouses, and other parties for unpaid storage and other charges
For many types of goods sold at G.O. auction, the actual payment amount is far less than the total amount of expenses and liens that have been accrued against the shipment. In this case, lower priority claims (especially liens filed by carriers and others) are often unpaid, and the lienholders and other lower-priority claimants receive nothing for their efforts.
In the unlikely event that any of the buyer’s payment is left over after all of these G.O.-related costs and expenses have been paid, the amount of the left over funds can be claimed by the original owner of the goods. (This does occasionally happen, but is extremely rare.)
Letting an import shipment go to General Order (instead of clearing it) becomes very expensive, for any importer who later chooses to clear the goods instead of just abandoning them to G.O. Any consignee who learns that they have a shipment that is pending General Order, or has already been sent there, is generally well advised to consult with their customs broker about costs and options before making a final decision on what action to take. (TCB is familiar with the issues and trade-offs involved, and will be happy to review them with you.)