Analysis of the Policy Transferring Destination Port Abandonment Liability and Costs to Shippers Effective May 1, and Practical Recommendations for Freight Forwarders and Exporters
I. Policy Background and Core Changes
On October 28, 2025, the 18th Session of the Standing Committee of the 14th National People's Congress approved the newly revised Maritime Code of the People's Republic of China, which will take effect on May 1, 2026. Article 93 of the revised Code has become a focal point of industry attention: where no one takes delivery of the goods at the port of discharge, the resulting costs and risks shall in principle be borne by the shipper, and the carrier shall promptly notify the shipper.
This revision fundamentally overturns an industry practice that had persisted for over three decades. Since the original Maritime Code took effect in 1993, the liability for non-delivery at the destination port had followed the rule of "consignee bears primary liability." Once the goods were loaded onto the vessel, the shipper was essentially no longer responsible for subsequent costs at the destination port. Many foreign trade practitioners had grown accustomed to the mindset of "once the goods are shipped, it's no longer my concern." However, as of May 1, 2026, this "exemption inertia" will come to a definitive end.
There are three core changes:
First, the liable party is completely reversed. Liability shifts from "consignee bears liability" to "shipper bears liability in principle." The shipper is now fully responsible for the entire logistics chain.
Second, the scope of liability is significantly expanded. The shipper is not only liable for the loss of the cargo value but also for all direct and reasonably indirect costs, including destination port demurrage, detention charges, storage fees, warehousing costs, auction/destruction fees, customs fines, and carrier recourse. These costs accrue daily and can easily exceed the cargo value itself.
Third, the distinction between contractual shipper and actual shipper is eliminated in principle. Some argue that the new law no longer distinguishes between a "contractual shipper" and an "actual shipper"—whoever delivers the goods to the carrier is fully responsible for them. However, it should also be noted that according to Guiding Case No. 230 of the Supreme People's Court, an actual shipper—who merely delivers the goods to the carrier without being the party that entered into the carriage contract with the carrier—generally bears no liability for compensation for losses arising from non-delivery at the destination port if it is not at fault. This rule of "liability in principle, exemption by exception" will likely become a central point of contention in future judicial practice.
II. Liability Determination Under the New Rules
2.1 Liability Under CIF/CFR Trade Terms
Under CIF or CFR trade terms, the seller arranges the transportation and enters into the carriage contract, thus the seller is generally recognized as the "contractual shipper." Under the new rules, if no one takes delivery at the destination port, the shipping company may directly pursue all costs from the seller as the contractual shipper. While the seller may seek recourse from the buyer under the sales contract, such recourse becomes extremely difficult when the buyer is uncontactable or insolvent.
2.2 Liability Under FOB Trade Terms
The situation under FOB terms is more complex. According to judicial practice, domestic exporters under FOB terms are typically only "actual shippers" without a maritime cargo carriage contract relationship with the carrier, and should not bear liability for costs arising from non-delivery at the destination port.
Take typical case (2025) Liaoning Min Zhong No. 291 as an example: The Liaoning Provincial Higher People's Court held in a final-instance judgment that an exporter under FOB terms is only an actual shipper and need not bear costs arising from non-delivery at the destination port. A freight forwarder that pays a settlement amount without authorization cannot seek reimbursement from the exporter. The key points of the court's reasoning include: (1) Under FOB terms, the buyer controls the transportation arrangements, and the exporter's mandate is limited to origin port matters; (2) Freight is payable at destination and transportation is arranged by the buyer; the mere endorsement on the bill of lading does not require the exporter to bear destination port costs; and (3) The freight forwarder's unauthorized payment of costs was not a reasonable expense incurred in handling the mandate and cannot be recovered from the exporter.
2.3 Liability in Special Circumstances
Undelivered Bill of Lading: Where the bill of lading has not been transferred and the shipper holds the full set of original bills, the shipper—as a party to the carriage contract—should bear liability for non-delivery at the destination port.
Joint and Several Liability of Freight Forwarders: If a freight forwarder fails to disclose the contractual shipper, it may be deemed the shipper and bear joint and several liability together with the actual shipper.
Consignee Has Exercised Rights: Only where the consignee has actually exercised its rights under the carriage contract (e.g., submitted documents, claimed delivery, exchanged documents) and then refuses or delays delivery shall liability fall on the consignee.
III. High-Risk Scenarios and Potential Consequences
3.1 Scenarios Most Likely to Trigger Shipper Liability
The following scenarios will most directly trigger full shipper liability:
Buyer Uncontactable / Absconding: The buyer becomes completely uncontactable upon arrival of the goods at the destination port and never claims delivery; liability falls 100% on the shipper.
Market Changes Leading Buyer to Abandon Cargo: The destination port sees a sharp increase in tariffs, a sharp decline in local market prices, or the buyer's cash flow dries up, causing the buyer to voluntarily abandon the cargo.
Hidden Risks Under FOB Terms: If the shipper participates in booking negotiations, it may be deemed a contractual shipper and still bear full liability for cargo abandonment.
Cross-border E-commerce Direct Mail / Overseas Warehouse Slow Sales: Buyer refusal to accept the goods or platform order abandonment—liability equally falls on the seller as the shipper.
3.2 The Alarming Speed of Cost Accumulation
The free storage period at the terminal is typically only 3 to 7 days. After this period expires, demurrage and detention charges compound daily, and within just a few weeks, the costs can match or even exceed the cargo value. The carrier will issue a written demand, exercise a lien on the goods, and directly seek recovery of all costs from the shipper. Failure to pay may result in litigation, damaged commercial credit, and even being placed on an industry blacklist. If no one takes delivery even after the demand, the goods will be auctioned or destroyed by law. The shipper not only loses everything but also bears the auction/destruction costs—truly a case of "losing both the money and the goods".
As one seller lamented: "Before, it was 'forget the goods and move on'; now it's 'lose the goods and still owe a debt'".
IV. Recommendations for Freight Forwarders
4.1 Clarify Your Role in the Carriage Contract
Freight forwarders must first clarify their legal identity under different business models:
Acting as an NVOCC: If the freight forwarder books space with the shipping company in its own name and issues its own bill of lading, it becomes the contractual shipper. It must bear destination port costs to the shipping company and then seek recourse from the actual cargo owner under its own carriage contract.
Acting as a Freight Forwarding Agent: If the freight forwarder merely books space on behalf of the client, issues a carrier's bill of lading with the actual cargo owner as SHIPPER, and acts as an agent, destination port costs are generally not the forwarder's liability. However, the forwarder must truthfully disclose the contractual shipper's information; otherwise, it may be deemed the shipper and bear joint and several liability.
4.2 Standardize Contracts and Authorization Scope
Clearly define the scope of mandate in the freight forwarding contract: Explicitly state that the mandate covers only origin port booking, customs clearance, etc. Handling destination port matters requires separate written authorization.
Never pay costs without authorization: Under Article 921 of the Civil Code, a principal's obligation to reimburse an agent for costs paid presupposes that such costs were necessary for handling the mandate and were incurred within the authorized scope. Costs paid by a freight forwarder without authorization cannot be recovered from the principal.
Include risk allocation clauses in contracts: Explicitly provide that if costs arise due to cargo abandonment at the destination port, the client (shipper) bears full liability.
4.3 Establish a Full-Process Risk Early Warning and Notification Mechanism
Promptly send the bill of lading and estimated time of arrival information to the client after shipment.
Send delivery reminders three times (7 days before arrival, on the day of arrival, and 3 days after arrival), and retain written records of notification.
Immediately notify the client and request written instructions on cargo disposal at the first sign of non-delivery at the destination port.
Assist the client in contacting the destination agent to confirm cargo status, and calculate demurrage and cargo disposal costs in advance.
4.4 Choose Partners and Business Models Carefully
Conduct due diligence on partners' qualifications and credit ratings through third-party credit agencies.
Carefully assess the creditworthiness of buyers in FOB transactions.
Develop contingency plans for destination port cargo abandonment and maintain close communication with destination agents.
V. Recommendations for Exporters
5.1 Prevention: Control Risks at the Source
Strictly Verify Customer Qualifications and Credit: Before entering into cooperation, fully verify the customer's corporate registration information, industry qualifications, and past trade records. Check credit ratings through third-party credit agencies such as Dun & Bradstreet, or request bank reference letters and past performance records.
Increase Advance Payment Ratio: The advance payment ratio should be no less than 50% and should generally be sufficient to cover round-trip freight and basic costs, thereby increasing the foreign buyer's cost of default and improving the performance rate of foreign trade contracts. For new or small-to-medium-sized clients, priority should be given to full prepayment or advance payment of at least 70%.
Optimize Trade Term Selection: Prefer CIF/CNF terms where the shipper controls the logistics chain, retaining control over the goods. If FOB terms must be used, ensure non-participation in booking negotiations and act only as an actual shipper facilitating delivery.
Include Cargo Abandonment Clauses in Contracts: Provide that if the consignee fails to take delivery within 7 days of the goods' arrival at the destination port, the consignee shall pay a penalty of 0.5% of the cargo value per day, and the shipper has the right to dispose of the goods. Also clearly define the notification obligations and delivery deadlines after the goods arrive at the port.
Assess Destination Country Policy and Market Risks: Research the destination country's trade policies, tariff fluctuations, and market conditions in advance. If the destination country has imposed countervailing duties or experienced sudden changes in import policies, defer large-scale shipments or split orders into smaller batches for shipment.
5.2 In-Transit Control: Monitor Cargo Status Throughout
Real-Time Cargo Tracking and Strengthened Delivery Reminders: Promptly send the bill of lading and estimated time of arrival information to the customer after shipment. Send delivery reminders three times and retain written records of notification.
Retain Control Over the Goods: Prefer transferable bills of lading or telex release (only after full payment is received) and avoid delivering original bills of lading to the customer prematurely. Agree with the freight forwarder that if goods are stranded at the destination port for more than 5 days, the shipper must be notified immediately. Implement a risk control directive that the goods cannot be released until full payment is received.
Monitor Customer Performance Signals Closely: Pay close attention to the customer's payment progress and communication attitude. If there are signs of delayed payment, slow responses, or refusal to communicate, immediately suspend subsequent order shipments and initiate contingency plans.
5.3 Post-Incident Response: Minimize Losses Quickly
Initiate cargo disposal procedures during the free storage period at the destination port (typically 3 to 7 days), prioritizing local resale at a discount to recover funds.
If no suitable buyer is available, assess the feasibility of return shipment (requires advance completion of return customs procedures).
Notify the carrier to abandon the cargo if necessary to prevent further accumulation of destination port costs.
Purchase export credit insurance or cargo abandonment insurance to transfer risk.
VI. Industry Compliance Recommendations and Summary
6.1 Establish a Full-Process Risk Control System
Mitigating the risk of cargo abandonment at the destination port requires a comprehensive risk control system encompassing three phases: pre-shipment customer qualification verification, in-transit cargo monitoring, and post-incident emergency response.
6.2 Considerations for Shipping Companies and Carriers
As carriers, shipping companies must promptly notify the shipper or its freight forwarding agent of non-delivery at the destination port, warn of the risk of increasing costs, and seek instructions on cargo disposal. If there is no feedback from the consignee, they must also properly dispose of the cargo in accordance with the law and fully perform their loss mitigation obligations.
6.3 Summary of Key Points
The implementation of Article 93 of the new Maritime Code marks a major change in the rules governing liability for cargo abandonment at destination ports. For freight forwarders, the key is to clarify their legal role in the carriage contract, standardize contract terms, never pay costs without authorization, and establish a full-process risk early warning mechanism. For exporters, the key is to strengthen pre-shipment customer due diligence, increase advance payment ratios, optimize trade term selection, retain control over the goods, and initiate disposal procedures quickly when cargo abandonment occurs.
As the new rules take effect on May 1, exporters and freight forwarders should prepare in advance. Don't wait until your goods rot at the port to realize how troublesome this is—because now the cost of cargo abandonment is far more than just the value of the goods.
