U.S. Court Upholds FMC Rule on Carrier Refusals to Deal
The U.S. Court of Appeals for the D.C. Circuit has upheld a Federal Maritime Commission (FMC) rule defining when ocean carriers unlawfully refuse to negotiate or provide vessel space, rejecting a challenge from the World Shipping Council (WSC).
The case stems from the Ocean Shipping Reform Act of 2022 (OSRA), which directed the FMC to clarify what constitutes an “unreasonable refusal to deal or negotiate” under the Shipping Act. The rule was introduced in 2024 amid widespread complaints from U.S. exporters about difficulty securing container space.
The WSC, representing carriers controlling roughly 90% of global liner capacity, argued the rule exceeded FMC authority and was arbitrary.
Court’s Key Findings
1. FMC can consider pricing behavior
The court ruled the FMC may treat extremely high freight rates as evidence of a refusal to negotiate in good faith.
2. Export policy reporting requirement is lawful
The rule requires carriers to submit an annual “documented export policy” outlining pricing strategies, services, and equipment allocation.
3. No issue with flexible, case-by-case approach
The FMC’s framework—based on non-binding factors like good-faith negotiation and legitimate transportation considerations—was upheld.
Industry Implications
The ruling reinforces the FMC’s expanded oversight under OSRA and signals that:
- Carrier pricing strategies may face scrutiny if they appear to block market access.
- Export service obligations—particularly for U.S. shippers—remain a regulatory priority.
- Enforcement will likely rely on fact-specific investigations, not bright-line thresholds.
For carriers, the decision underscores the importance of documented, consistent commercial policies and demonstrable good-faith engagement with shippers.
The full court report can be read here.
