A landmark decision by a U.S. administrative law judge has ordered Orient Overseas Container Line (OOCL) to pay $45.6 million in reparations to the bankruptcy estate of Bed Bath & Beyond, marking the largest award in the history of the Federal Maritime Commission (FMC).
In a detailed 203-page ruling issued on April 24, Chief Administrative Law Judge Erin Wirth found that OOCL violated multiple provisions of the U.S. Shipping Act during the COVID-era freight surge. The judge concluded that the carrier failed to honour contracted space commitments, retaliated against the shipper after complaints were raised, and engaged in refusal to deal.
OOCL, a Hong Kong-based subsidiary of COSCO Shipping Holdings, was found to have significantly reduced cargo space allocations to the retailer at a time when global freight rates were soaring. According to the ruling, OOCL provided only about 70% of contracted capacity in 2020, dropping to nearly 53% during parts of 2021–2022. This forced Bed Bath & Beyond to rely on the volatile and expensive spot market, worsening its financial distress ahead of its 2023 bankruptcy and liquidation.
Judge Wirth stated that OOCL “did not make a good faith effort” to meet its contractual obligations and determined that the violations were “willfully and knowingly committed.” The ruling also highlighted a 2022 carrier communication deemed retaliatory, which influenced subsequent cargo allocation decisions.
While the $45.6 million award is substantial, it is significantly lower than the $165 million initially sought by Bed Bath & Beyond. The judge rejected claims related to detention and demurrage charges, along with several other cost components.
OOCL had argued that the dispute fell outside FMC jurisdiction, framing it as a private contractual matter. However, the judge dismissed this position, reinforcing the FMC’s authority to adjudicate such cases under the Shipping Act.
The decision could have far-reaching implications across the container shipping industry. Several major shippers—including Samsung Electronics, QVC, and Dollar General—have filed similar complaints stemming from pandemic-era service disruptions. Carriers named in those cases include MSC Mediterranean Shipping Company, Evergreen Marine, CMA CGM, and HMM.
Both OOCL and the complainant have 22 days to file exceptions, after which the ruling will be subject to full commission review. The outcome is expected to set an important precedent for how ocean carriers balance contract commitments and market dynamics during periods of extreme disruption.
