Cargo Damage in China: How the 2026 Rules Change the Number You Recover

From 1 May 2026 a cargo claim in a Chinese court is measured by the market price at the place of delivery, not by the invoice value at the port of shipment. When the market has risen between shipment and arrival, a buyer now recovers more than it paid. When the market has fallen, it recovers less. That is the whole of the change — and for most buyers it will be less important than the second ceiling nobody mentions, which caps the claim by weight regardless of what the cargo was worth.

The short answer

How the old rule worked

Article 55 of the 1993 Code set the measure of damages in three short paragraphs:

"The compensation for loss of goods shall be calculated according to the actual value of the goods; compensation for damage to goods shall be calculated according to the difference between the actual value before and after the damage, or according to the cost of repair. The actual value of the goods shall be calculated according to the value at the time of shipment plus insurance plus freight. The actual value provided in the preceding paragraph shall be reduced, at the time of compensation, by the expenses saved or not incurred as a result of the loss or damage."

In substance, the measure was the CIF value at the port of shipment. It was objective, easy to prove from the invoice and the freight invoice, and it had nothing to do with what the goods were worth when they arrived. A buyer whose cobalt or steel had doubled in value during the voyage recovered the old shipment value and no more.

How Article 56 works now

The revised provision reads:

"The compensation for loss of goods shall be calculated according to the actual value of the goods; compensation for damage to goods shall be calculated according to the difference between the actual value before and after the damage, or according to the cost of repair.

The actual value of the goods shall be calculated according to the market price at the place of delivery at the time of delivery; where the market price at the place of delivery at the time of delivery cannot be ascertained, it shall be calculated according to the value at the time of shipment plus insurance plus freight.

The actual value provided in the preceding paragraph shall be reduced, at the time of compensation, by the expenses saved or not incurred as a result of the loss or damage."

The fallback has not disappeared; it has moved from being the rule to being the residual case. That ordering is the change. It also creates the first practical problem for a claimant: the primary measure now depends on proof of a market price at the delivery point, and buyers who have no access to a published index or a comparable transaction will find themselves pushed back to the CIF measure that they were trying to escape.

Note the saving in the third paragraph. Where the buyer has not paid freight, or has had duty refunded, or has avoided downstream costs because the goods never arrived, those amounts are deducted. A claim calculated at destination market value is reduced by everything the buyer did not have to spend.

The ceiling that actually binds

Article 57 sets the limitation of liability, and it did not change:

"The limitation of the carrier's liability for loss of or damage to goods shall be calculated according to the number of packages or other shipping units, at 666.67 units of account per package or other shipping unit, or 2 units of account per kilogram of gross weight, whichever is the higher. This does not apply where the nature and value of the goods have been declared by the shipper before shipment and stated in the bill of lading, or where the carrier and the shipper have agreed a limitation higher than that provided in this Article."

The "unit of account" is the Special Drawing Right. Two SDR per kilogram is roughly 2,000 SDR per tonne. At an assumed rate of 1 SDR to US$1.35 that is about US$2,700 per tonne — and the rate moves, so treat that figure as an illustration rather than a value.

The point is the comparison. Machinery, electronics, pharmaceuticals, specialty steel and most manufactured goods are worth far more per tonne than US$2,700. A buyer shipping 20 tonnes of goods worth US$5,000 per tonne, total value US$100,000, whose cargo is destroyed, recovers about US$54,000 under Article 57 no matter what Article 56 says the market price was. The market-price rule only bites in the band between the CIF value and the package limitation — which is to say, almost never, for high-value cargo.

For bulk commodities the position reverses. Iron ore, coal, grain and petroleum coke are worth well under US$1,000 per tonne, so the 2 SDR per kilogram limit sits above the cargo value and never binds. For those cargoes the Article 56 change is the whole argument, and the direction depends entirely on which way the market moved during the voyage.

Three ways past the limitation

Declare the value and put it in the bill. The proviso to Article 57 disapplies the limitation where the shipper has declared the nature and value of the goods before shipment and the declaration appears in the bill of lading. This is available in principle on every shipment and used on almost none, because a declared value usually attracts ad valorem freight. A buyer who knows its cargo is worth many multiples of the limitation should be asking, before shipment, what the carrier would charge to accept a declared value.

Agree a higher limitation. The same proviso allows the carrier and shipper to agree a limitation higher than the statutory figure. This is a contract term, and it is negotiable in the same way as any other.

Break the limitation by proving intent or recklessness. The Code denies the carrier the benefit of the limitation where the loss resulted from an act or omission done with intent to cause damage, or recklessly and with knowledge that damage would probably result. This is the standard formulation found in the Hague-Visby Rules and it is deliberately hard. In practice it succeeds where there is something like a deliberate misdelivery or a forged bill of lading, and fails against ordinary negligence.

Where the claim is partly the carrier's fault

Article 55 addresses mixed causation: where loss, damage or delay results partly from a cause for which the carrier is liable and partly from one for which it is not, the carrier is liable only to the extent of the former, and it bears the burden of proving the extent of the latter. In practice the carrier will assert that the damage pre-existed shipment, or resulted from packing, or from the inherent vice of the goods, and will produce survey evidence to support it. The buyer's answer is the pre-shipment inspection and the clean bill of lading.

Notice, and the deadline that is easy to miss

The substantive measure is worth nothing if the notice provisions are missed. Separate from the claim itself, the Code requires written notice of loss or damage and, for delay, sets a specific bar: where the carrier has not received written notice of economic loss caused by delay within sixty consecutive days from the day following delivery, it is not liable for that loss. The notice clock runs independently of any negotiation, and a buyer who spends two months arguing about a survey loses the delay claim while winning the argument.

What to do before the container is loaded

1. Work out whether the limitation or the market price will decide your claim. Divide the cargo value by the gross weight in kilograms. If the answer is comfortably above 2 SDR, the limitation decides everything and the Article 56 change is irrelevant to you. If it is below, Article 56 is the whole case.
2. If the value is above the limitation, ask the carrier for a declared-value rate. Do this before shipment, because the declaration has to be made before shipment and stated in the bill. After the cargo is lost, the option is gone.
3. Secure evidence of the destination market price at the date of delivery. A published index, exchange quotations, or two or three comparable offers obtained contemporaneously will do. Without one, Article 56 sends you back to CIF value.
4. Inspect before shipment and keep the clean bill. The mixed-causation defence is the carrier's main answer to a damage claim, and a pre-shipment survey certificate plus a clean bill of lading is the answer to it.
5. Diarise the notice periods from the delivery date. For delay claims the outer limit is sixty days from the day after delivery. Put the date in the file when the cargo arrives, not when the dispute starts.

Frequently asked questions

Do I recover more if the market rose?

Yes, provided the cargo is worth less per kilogram than the package limitation. Where the limitation applies, it caps the claim regardless of the rise, so the answer for high-value cargo is no.

What is a "unit of account"?

The Special Drawing Right, the IMF's basket currency. It is converted at the date the limitation is applied, not the date of shipment, so the sterling or dollar figure is not fixed until the award or settlement.

Is the limitation per package or per kilogram?

Whichever produces the higher figure. For dense, low-value cargo the weight calculation will usually be higher; for light, high-value cargo the package count may be. The claimant takes the better of the two.

Does a container count as one package?

Where the bill of lading states the number of packages or units packed inside the container, that stated number is used. Where it does not, the container itself counts as one package or unit. A bill that says only "one container" and nothing about its contents can therefore reduce the claim dramatically, which is a reason to read the description field before shipment.

Does the new rule apply to shipments loaded before 1 May 2026?

Not automatically. The Supreme People's Court issued a separate transitional instrument, effective the same day, dealing with contracts whose performance spans the old and new law. Whether a particular claim is measured under Article 55 of the old Code or Article 56 of the new one depends on that instrument and on when the loss occurred, and it should be checked before a claim is quantified.

Can I claim the difference between the market price and what I resold for?

No. The measure is the market price at the place of delivery, not your resale price. A favourable resale contract does not increase the claim, and an unfavourable one does not reduce it.

Quantify the claim before you decide whether to bring it

Send me the bill of lading, the commercial invoice, the survey report and the freight invoice, and I will tell you which measure applies, whether the package limitation will cap the claim, what the notice position is, and whether the figure that comes out justifies the cost of pursuing it. The costs of a claim are set out in what it costs to sue a Chinese supplier and what you can recover, and the position where the goods never shipped at all is in how to recover money from a Chinese supplier that stopped shipping. Where the honest answer is that the limitation makes the claim uneconomic, that is what you will be told. The enforcement side, if the quantified claim is worth bringing, is set out in dispute resolution.

About the author

Li Xinlei (Aaron Li) is a partner at Beijing Huicheng (Jinan) Law Firm in Jinan, Shandong, where he acts for foreign companies and individuals in international trade disputes, cross-border enforcement and construction claims. He has five years of international engineering and market development experience in the Middle East and South Asia, and writes on China trade lawyer practice from the buyer's side — what to check, what it costs, and what can actually be recovered.

Source note: the statutory text discussed is the Maritime Code of the People's Republic of China as revised and adopted by the Standing Committee of the 14th National People's Congress on 28 October 2025 and in force from 1 May 2026, together with Article 55 of the 1993 Code which Article 56 replaces. Chinese statutory text is quoted in English translation prepared for this article; the Chinese text governs. The Special Drawing Right conversion given in the text is an illustration at an assumed rate and is not a statement of the rate applicable to any claim.

Disclaimer: This article provides general legal information and does not constitute legal advice for any specific case. Procedural rules and judicial practice change, and the appropriate route depends on the facts of the individual matter. Please consult and appoint a qualified lawyer for your own case.