Meaning
A statutory right allows a port, terminal, or warehouse operator to retain possession of stored goods until the owner pays all outstanding storage fees and handling charges. Port authorities and logistics firms in China assert terminal storage liens to secure their unpaid invoices when a cargo owner becomes insolvent or abandons the goods. The right of retention allows the terminal to refuse delivery to any party until the debt is cleared.
This lien is governed by the Chinese civil code’s provisions on possessory liens.
Possessory Right
Continuous physical possession of the cargo is required to maintain the validity of the right. If the operator voluntarily surrenders the goods, the terminal storage liens are extinguished under Chinese law. This means that terminals must never release the cargo until payment is received or alternative security is provided.
Debt Recovery
Lenders holding a pledge over the same goods must negotiate with the terminal to release the cargo, as the terminal’s lien takes priority over many registered security interests. The assertion of terminal storage liens ensures that the logistics provider is paid before the bank can foreclose on the collateral. This protects the operational cash flow of the port.
Sale Process
Before the terminal can sell the goods to recover the debt, they must give the owner a reasonable period of time to pay. In the execution of terminal storage liens, if the owner fails to clear the debt within the notice period, the operator can auction the cargo under civil code procedures. The proceeds are used to pay the outstanding fees, with the balance returned to the owner.
