Irrespective of whether you are an e-commerce seller, manufacturer, exporter, importer or logistics professional, it is important for you to have knowledge of basic logistics terminology in order to ship products without any problem. Some of the most frequently confusing shipping terminologies are consignor and consignee. Although both terms sound similar, they actually refer to two completely different entities within shipping.
Understanding the difference between consignor vs consignee prevents any kind of mistakes in documentation, problems while clearing customs, shipment problems and even delivery problems. In this article, you will learn who is a consignor, who is a consignee, consignment definition, the role and responsibilities of each, main differences, examples and documents in which these terminologies are used.
Who is a Consignor?
Consignor refers to an individual, firm or organisation that sends products to another party through transportation services. In short, a consignor refers to the person or entity, shipping the goods from their end.
It is the consignor who initiates the process of shipping and makes sure that the goods are ready for shipment.
The consignor can be any of the following:
- Manufacturer
- Supplier
- Seller
- Exporter
- Distributor
- E-commerce firm
For instance, when an e-commerce seller ships a parcel to the customer, he is the consignor.
Responsibilities of Consignor
The consignor carries out various responsibilities before the shipment is despatched.
Packaging of Goods
The consignor packs goods properly so that they are not damaged during transit. Packing is necessary and should follow shipping regulations.
Preparation of Shipping Documents
The consignor prepares some essential shipping documents like:
- Commercial Invoice
- Packing List
- Bill of Lading
- Air Waybill
- Delivery Challan
- E-way Bill (if needed)
Shipping Regulations
To ship the goods domestically or internationally, the consignor must follow customs regulations, tax requirements, export documents and packing standards.
Handing Over of Goods to the Carrier
After completing all the responsibilities, the consignor hands over goods to the carrier.
Who is a Consignee?
Consignee refers to the person or company to whom the shipment is sent. In simple terms, the consignee refers to the receiver whose name is written on the shipping documents.
The consignee receives the shipment after the transportation process is completed.
The consignee can be:
- Buyer
- Importer
- Warehouse
- Retail Store
- Distribution centre
- Third-party Logistics (3PL) Provider
- Authorized Agent
Responsibilities of the Consignee
There are certain duties performed by the consignee when the shipment arrives at the desired destination.
Receiving Shipments
The consignee receives the shipment from the carrier after checking all the details about the shipment.
Inspection of Shipment
Before accepting the shipment, the consignee should inspect it for any damage or discrepancies.
Verification of Documents
The documents related to the shipment such as invoice, packing list and delivery documents should be verified by the consignee.
Accepting shipment and arranging for the storage of goods.
After verifying the shipment, the consignee signs the delivery documents and arranges storage or further distribution of goods if required.
What is a Consignment?
A consignment refers to goods that need to be shipped from one party (the consignor) to another (the consignee) for transport, storage, sale or delivery.
In logistics, a consignment simply means a shipment of goods being transported from one location to another.
In case of consignment sales, the ownership of the goods stays with the consignor until the consignee sells the goods. Then, the consignee becomes an agent on behalf of the consignor and earns commission on sale of the goods.
Consignor vs Consignee: Key Differences
| Basis | Consignor | Consignee |
| Meaning | Party sending goods | Party receiving goods |
| Role | Sender | Receiver |
| Position | Shipment origin | Shipment destination |
| Responsibility | Despatch goods | Accepts delivery |
| Documents | Prepares shipping documents | Verifies shipment documents |
| Ownership | May retain ownership depending on agreement | May or may not own the goods |
| Examples | Manufacturer, exporter, seller | Buyer, importer, warehouse |
List of Documents that Include Information about Consignor & Consignee
Some of the shipping documents that include consignor and consignee information are mentioned below.
Bill of Lading
This document that mentions consignor, consignee, carrier details and shipment for sea freight.
Air Waybill
A document used for air cargo shipment that has complete information about the sender and receiver.
Commercial Invoice
The document that has information of the seller (consignor), buyer (consignee), information of items being shipped and transaction value.
Packing List
Information about shipment items, package dimensions, consignor and consignee.
Shipping Label
It contains information about the sender and receiver address to make the process of transportation easy.
Delivery Challan
Document used when goods are shipped without issuing a tax invoice. It is commonly used in India for specific business transactions.
E-way Bill (India)
An electronic document mandatory for goods being shipped above the prescribed value limits in GST. Contains consignor and consignee information.
Ownership and Liability in Shipping
Knowing who owns the cargo is another important factor to understand in terms of consignor and consignee transactions.
Who Owns the Goods in Transit?
Ownership is based on the sales contract and terms of trade. In most instances, the consignor still owns the shipment until certain conditions in the contract are fulfilled.
When it comes to consignment sales, the owner of the shipment is the consignor until the consignee sells the goods.
Who is Responsible for Risk?
The risk of the transaction depends on shipping terms like FOB, CIF and EXW.
At times, it is the consignor who takes on the transportation risk until a specified point, or the consignee becomes responsible after the delivery of the shipment to the carrier.
When is the Transfer of Ownership Done?
Transfer of ownership depends on the purchase contract agreed upon by the buyer and the seller.
Some common points for the transfer of ownership include:
- After shipment
- From the shipping port
- After clearing customs
- After successful delivery
- After completing payment
Mistakes Made by Businesses
There are many mistakes that businesses make regarding shipping that can lead to delays or problems.
Confusing the Shipper and the Consignor
Even though they are often the same, it is not always the case for shipper and consignor. Understanding the difference helps ensure accurate shipping documentation.
Assuming that Consignee always own the Goods
Goods sold on consignment are delivered to the consignee but he owns the goods only under certain conditions.
Failing to Use Proper Shipping Documents
Shipment could be delayed because of incorrectly spelled name, wrong GST number, or any other shipping documents mistakes.
Customs Documentation Error
Incomplete or inaccurate customs documentation can result in shipment delays, customs holds or additional inspections for international shipments.
Payment and Ownership Error
Terms of the agreement should be well-defined to prevent future problems.
Tips to Avoid Mistakes in Shipping Documents
By following just a couple of tips, you can prevent most mistakes in shipping.
Consistency of Consignee Information
Make sure that the name, address, phone number and PIN code of the recipient are correct.
Address Accuracy
Incorrect address may cause problems and result in returned shipments. So always verify the address before sending a shipment.
Consistency of Information on Invoice
The invoice, packing slip, shipping label and shipping document should have matching information.
Record-Keeping
Make sure that copies of your shipping documents are stored for auditing purposes.
Conclusion
Understanding the exact roles of consignor and consignee is essential for anyone involved in shipping, logistics or e-commerce. While the consignor sends the cargo, the consignee receives and verifies the shipment at its destination. A clear understanding of their roles, duties, ownership laws and necessary documents will ensure that shipping mistakes are reduced.
Shipping locally and internationally becomes easier when the consignor and consignee are clearly identified.
FAQ’s
Difference between Consignor & Consignee?
The consignor despatches the goods while the consignee receives them. The consignor starts the movement of goods while the consignee receives them at the destination point.
Who is consignor in shipment?
Consignor refers to the sender of the shipment that includes manufacturer, supplier, exporter, distributor or e-commerce company.
Who is the consignee in logistics?
Consignee is the party designated to accept the shipment which can be a buyer, importer, warehouse or retail store.
Is a consignor always a seller?
No. Although consignor is usually a seller, but he can also be a manufacturer, distributor, exporter or any other person who has authorised the movement of the goods.
Is a consignee always a buyer?
No. Consignee can be a buyer, but he can also be a warehouse, customs agent, distribution centre or agent of a buyer.
