Over $68 million in combined awards — issued within months of each other — reflect the FMC's sharpest enforcement posture in its history. Members who deal with ocean carriers should take note. So should NVOCCs and freight forwarders.

Within a span of four months, the Federal Maritime Commission (FMC) issued the two largest penalties in the agency's history — one against Mediterranean Shipping Company (MSC) and one against Orient Overseas Container Line (OOCL). Together, they represent a fundamental shift in how seriously the FMC is taking Shipping Act enforcement, and they carry direct lessons for every member of this Association. Additionally, in May 2026, the FMC and Maersk came to a settlement agreement based on an over-expansive billing of detention to third parties. 

Case	Violation Type	Penalty
OOCL (Dkt. 23-02) April 24, 2026	Service contract failures; refusal to deal; retaliation (46 U.S.C. §§ 41102, 41104)	$45,600,599 (reparations)
MSC (Dkt. 23-08) January 6, 2026	Improper D&D billing; tariff non-publication; NOR overcharges (46 U.S.C. §§ 40501, 41102(c))	$22,670,000 (civil penalties)
Maersk Compromise Agreement, May 26, 2026	Detention charges imposed on third parties under the 'Merchant' clause	$1,900,000 (civil penalties)
Combined (two cases, one settlement):		$70,170,599

The OOCL and MSC decisions are still subject to further review. The OOCL ruling is an initial decision subject to full Commission review; the MSC ruling was the full Commission’s final order upon review of the underlying ALJ initial decision.

Case 1: DK Butterfly-1 (f/k/a Bed Bath & Beyond) v. OOCL — $45.6 Million in Reparations

Docket No. 23-02  | Initial Decision issued April 24, 2026 |  Chief ALJ Erin Wirth

Background

When Bed Bath & Beyond filed for Chapter 11 bankruptcy in 2023, its administrator (now called DK Butterfly-1) filed a complaint with the FMC alleging that OOCL had exploited pandemic-era shipping market conditions to sideline its long-term contract commitments with the retailer in favor of higher-paying spot-market cargo. The 203-page initial decision, issued in late April 2026, is one of the most consequential private Shipping Act rulings ever issued.

The Shipping Act Violations

1. Failure to Meet Minimum Quantity Commitments / Unreasonable Practices (46 U.S.C. §§ 41102, 41104)

   BBBY alleged — and the ALJ agreed — that OOCL provided only about 70% of its contracted space capacity in 2020, dropping to roughly 53% during part of the 2021-22 shipping year. The ALJ found this violated the carrier's statutory obligation to equitably apportion available space among contract customers even during periods of peak demand. The ruling reaffirmed longstanding FMC precedent: pandemic-driven market disruption does not suspend a carrier's service contract obligations.

2. Refusal to Deal by Rolling Containers (46 U.S.C. § 41104)

   The ALJ found OOCL effectively refused to deal with BBBY by consistently declining bookings and steering available space toward higher-rate alternatives.

3. Retaliation (46 U.S.C. § 41102(d))

   After BBBY sent complaint letters to OOCL in October 2021 and February 2022 regarding demurrage, detention, and space allocation failures, OOCL responded by further reducing BBBY's cargo carriage and negotiating adverse contract terms for 2022-23. The ALJ found the violations were willfully and knowingly committed.

   Note: D&D claims against OOCL were separately dismissed because the ALJ found that the claims were not proven on a container-by-container basis.

How Penalties Were Calculated

The reparations award of $45,600,599.25 was computed based on the number of containers BBBY was denied (compared to contracted minimums) multiplied by the estimated profit per container (based on the freight rate differential—calculated as the difference between spot rates paid and contract rates), adjusted for containers BBBY was able to route through NVOCCs at additional cost. The judge found some of OOCL's objections to BBBY's damages model well-founded and adjusted the claim downward from the $165 million sought, but the resulting award is still the largest reparations payment in FMC history.

FMC Jurisdiction Affirmed

OOCL argued that these were essentially breach-of-contract claims outside the FMC's jurisdiction. The ALJ rejected that argument, holding that the conduct raised statutory questions about unreasonable practices and carrier obligations squarely within the FMC's authority — a ruling that significantly broadens the scope of actionable carrier conduct before the FMC.

Note that OOCL filed a temporary restraining order (“TRO”) in a federal court in Texas, challenging the constitutionality of the appointment of ALJs at the FMC under the so-called “Take Care” clause of Art. II of the U.S. Constitution. The TRO request was denied shortly after filing because the judge found that OOCL had not exhausted administrative remedies and the challenge was premature.  Nonetheless, OOCL will presumably continue to pursue its constitutional challenge to the FMC’s ALJ appointment/adjudication process. Notably, the same “Take Care” clause challenge was also raised by MSC in connection with post-ALJ decision briefing ahead of the FMC’s penalty decision discussed below.

Case 2: FMC Bureau of Enforcement v. MSC — $22.67 Million in Civil Penalties

Docket No. 23-08  | Commission Order issued January 6, 2026

Background

Unlike the OOCL case—which was a private complaint by a shipper—the MSC case was a Commission-initiated enforcement action brought by the Bureau of Enforcement, Investigations, and Compliance (BEIC). The FMC reviewed the ALJ's initial decision and, critically, expanded it: what the ALJ had assessed as roughly $4 million in penalties became $22.67 million after the full Commission's review. The FMC found three separate categories of Shipping Act violations spanning 2018 to 2023.

The Shipping Act Violations

1. Improper Billing of Customs Brokers as 'Notify Parties' for D&D Charges (46 U.S.C. § 41102(c)) — $65,000

   Between 2018 and 2020, MSC used the merchant clause in its bills of lading to bill customs brokers who were listed only as notify parties for demurrage and detention charges. The FMC affirmed this as an unreasonable practice, finding it inconsistent with the “Incentive Principle” that governs D&D: charges should only be imposed when the charge will promote freight fluidity. And the role as notify parties alone was insufficient to impose liability on customs brokers. Thirteen violations remained within the statute of limitations, yielding $65,000. Violations were not found to be knowing and willful because FMC guidance on proper billing parties was not yet clearly established at the time.

   Why this matters to forwarders and customs brokers: This holding directly protects intermediaries who receive D&D invoices but had no actual control over cargo delivery. It establishes that billing a party based solely on its appearance as a notify party is a Shipping Act violation.

2. Failure to Publish Tariff Rates for Non-Operating Reefers (NORs) (46 U.S.C. § 40501) — $9,460,000

   MSC's published tariff contained no clear statement of its demurrage and detention rates for non-operating reefer containers (i.e., refrigerated units being used as dry storage). Section 40501 requires carriers to publish all charges and rules in their tariffs so that the shipping public has transparent, accessible pricing information. MSC's failure, regardless of its internal policy to bill NORs at lower dry-container rates, meant that customers and intermediaries had no way to verify what they were actually being charged.

   The FMC found that violations became knowing and willful starting March 9, 2022, when MSC told the FMC it would correct its tariff, and then failed to do so for another full year. 

3. Overcharging NOR Containers at Reefer Rates (46 U.S.C. § 41102(c)) — $13,145,000

   In 2021, MSC charged customers reefer-container D&D rates, which reflect enhanced handling costs, for NOR containers that required no such enhanced handling. The ALJ had treated this as a billing system error and declined to find a violation. The FMC reversed that finding, holding that a pattern affecting nearly a quarter of all NOR invoices across an entire calendar year is not an isolated mistake: it is an unreasonable practice within the meaning of § 41102(c), regardless of how it originated. The FMC assessed $5,000 per violation across 2,629 overcharges. (Violations were not deemed knowing/willful because the record did not establish when MSC became aware the error had become widespread.)

Constitutional Challenges Rejected

MSC challenged the FMC's authority on both Seventh Amendment (right to jury trial) and Article II (“Take Care” Clause) removal protections for ALJs) grounds. The FMC rejected both, finding that tariff-publication enforcement falls within the 'public rights' doctrine applicable to foreign maritime commerce, and that MSC could not show it was harmed by any alleged structural defect.

Maersk Settlement: FMC Investigation into Maersk — $1.9 Million in Civil Penalties

FMC press release on the compromise agreement on May 26, 2026

Background

The FMC settled with Maersk upon allegations that Maersk was violating the Shipping Act by assessing detention charges against third parties who had not consented to be bound by Maersk’s terms and conditions in its bills of lading, service contracts, or tariffs. According to the press release, Maersk agreed to terminate this practice and amend its terms and conditions to tailor the ‘merchant’ definition in compliance with 46 C.F.R. § 515.2(b) to shippers, consignees, and persons with a beneficial interest in the cargo. Maersk did not admit to any violations but will pay the penalty and issue refunds and waivers to third parties that were wrongfully charged detention. 

Merchant Clause Scrutiny

Like the MSC case, the Maersk settlement demonstrates skepticism from the FMC about overly-broad definitions of “merchant” in ocean carriers bills of lading and terms and conditions in rules tariffs and service contracts. NVOCCs should also consider amending their definitions after reviewing 46 C.F.R. § 515.2(b). 

What FMC Enforcement Against Ocean Carriers Means for NVOCCs and Freight Forwarders

The FMC's enforcement authority is not limited to vessel-operating common carriers. NVOCCs and ocean freight forwarders are licensed Ocean Transportation Intermediaries (OTIs) subject to Shipping Act obligations, and they face the same scrutiny. The lessons from these two cases translate directly to intermediary operations:

• Tariff publication is mandatory and must be accurate. NVOCCs are required to publish tariffs covering all rates, charges, and rules. The MSC case makes clear that an internal policy is not a substitute for a published tariff and that failing to publish charges, even unintentionally, can constitute a per-day violation with penalties accumulating rapidly.
• D&D charges must go to the right party. The MSC merchant-clause ruling and the Maersk settlement reinforce that D&D charges may only be assessed against parties who have actual control over cargo availability and equipment return. Forwarders and customs brokers listed only as notify parties should push back on improper D&D invoices, and the FMC has now validated that practice through a finding of violation.
• Service contract rights are enforceable. The OOCL decision confirms that when carriers fail to meet minimum quantity commitments or otherwise underperform service contracts, shippers and intermediaries have enforceable rights before the FMC, including substantial reparations. NVOCCs operating as shippers under service contracts with ocean carriers may assert similar claims.
• The FMC is actively enforcing, not just adjudicating. The MSC case was initiated by the BEIC, not filed by a private party. This means the FMC is independently monitoring carrier billing practices and tariff compliance. The FMC has also added two temporary ALJs to handle its growing caseload, signaling continued enforcement momentum.
• Retaliation for complaints is prohibited. The OOCL ruling found the carrier retaliated against a shipper for filing legitimate complaints about service failures and D&D charges. Members should document their communications with carriers and not be deterred from asserting their rights.

The Bigger Picture: A Post-OSRA Enforcement Environment

These two decisions did not emerge from a vacuum. The Ocean Shipping Reform Act of 2022 (OSRA) significantly strengthened the FMC's enforcement tools, clarified carrier obligations under service contracts, and expanded protections against unreasonable D&D practices. 

DK Butterfly-1's parallel complaints against other carriers, including Evergreen, HMM, Yang Ming, MSC, CMA CGM, and BAL Container Line, remain pending. A federal appeals court also recently upheld the FMC's earlier Evergreen ruling on D&D charges, further cementing the FMC's regulatory posture. The OOCL case in particular is expected to serve as a template for the other pandemic-era carrier complaint dockets.

The message from the FMC is unambiguous: the pandemic did not suspend carriers' legal obligations, and the FMC will hold them accountable. For members of this Association, these decisions are both a shield, affirming that improper carrier conduct is actionable, and a reminder to ensure your own Shipping Act compliance is in order.