The FMC Can Now Treat High Freight Rates as Evidence of Bad Faith. What the Refusal-to-Deal Ruling Means for Shippers.

Key Takeaways

On March 31, 2026, the D.C. Circuit Court of Appeals upheld the FMC’s rule defining when ocean carriers unlawfully refuse to negotiate or provide vessel space to shippers.
The World Shipping Council (WSC), representing roughly 90% of global liner capacity, challenged the rule. The court rejected the challenge on all counts.
Three things now have legal foundation: the FMC can consider pricing behavior as evidence of bad faith, carriers must file annual “documented export policies,” and the removal of “business decisions” as a listed defense factor stands.
This matters right now because carriers are implementing emergency surcharges, adjusting service networks, and operating in a market with constrained capacity. The rule gives the FMC a stronger enforcement toolkit during exactly the kind of market where carrier-shipper tensions escalate.
For shippers, especially U.S. exporters, the ruling creates a clearer pathway to challenge carrier refusals. For carriers, it raises the stakes on maintaining documented, consistent commercial policies.

Who This Is For

This post is for U.S. exporters, importers, freight forwarders, and BCOs who negotiate vessel space with ocean carriers on U.S. trades. If you have experienced rolled cargo, refused bookings, or rates that seemed disconnected from the market, this ruling defines the regulatory framework for when those practices cross a legal line.

Background: Why This Rule Exists

During the pandemic-era supply chain crisis (2020-2022), U.S. exporters, particularly agricultural shippers, faced severe difficulty securing container space on outbound vessels. Carriers prioritized repositioning empty containers to Asia to serve the lucrative import trade rather than loading lower-margin export cargo. Cotton bales sat in warehouses. Soybeans missed loading windows. Exporters watched empty containers leave on vessels that had refused their bookings.

Congress responded with the Ocean Shipping Reform Act of 2022 (OSRA), signed into law on June 16, 2022. Among other provisions, OSRA directed the FMC to define what constitutes an “unreasonable refusal to deal or negotiate with respect to vessel space accommodations.”

The FMC published its Final Rule in July 2024, effective September 23, 2024. The World Shipping Council immediately challenged it in court.

What the Court Upheld

The D.C. Circuit denied the WSC’s petition for review on every point. Here is what that means in practice:

1. The FMC can consider pricing behavior

The WSC argued that the FMC lacks authority to evaluate carrier pricing, since the 1984 Shipping Act eliminated the FMC’s general ratemaking authority. The court disagreed.

The rule includes a non-binding example of unreasonable conduct: quoting rates “so far above current market rates that they cannot be considered a good faith offer.” The court found this is not rate regulation. It is using price as one factor, among many, to assess whether a carrier negotiated in good faith.

What this means for shippers: If a carrier quotes you a rate that is vastly above the prevailing market rate for the same lane and equipment type, that pricing behavior can now be cited as evidence of an unreasonable refusal to negotiate. The rate alone is not a violation, but combined with other factors (no documented export policy, no good-faith negotiation, no legitimate transportation justification), it strengthens a complaint.

What this means for carriers: Pricing strategies that appear designed to block market access rather than reflect actual service costs face potential scrutiny. Carriers are not prohibited from charging market rates, even high ones, but rates that function as de facto refusals to deal are now subject to FMC review.

2. Carriers must submit annual documented export policies

OSRA requires carriers to file a “documented export policy” with the FMC each year. The WSC argued this exceeded the FMC’s statutory authority. The court upheld the requirement.

A documented export policy must detail:

Pricing strategies for U.S. outbound services
Services offered
Equipment provision
Markets served

What this means for shippers: Carriers now have a documented baseline against which their actual behavior can be measured. If a carrier’s export policy says it serves a particular market with a particular equipment type, and then it consistently refuses bookings on that lane without documented justification, the gap between policy and practice becomes evidence.

What this means for carriers: The documented export policy is both a compliance obligation and a defensive tool. Carriers that maintain detailed, consistent policies and can demonstrate they followed them have a stronger defense against refusal-to-deal complaints. Carriers with vague or generic policies have less to stand behind.

3. “Business decisions” was removed as a listed factor

The FMC’s earlier proposed rule included “business decisions” as one of the factors it would consider when evaluating a carrier’s refusal. In the final rule, the FMC removed it from the listed factors. The WSC argued this removal was arbitrary.

The court held that the omission of “business decisions” does not prevent carriers from raising business justifications in individual cases. It simply means the FMC is not required to defer to vague business rationale as a presumptive defense. Each case will be evaluated on its specific facts.

What this means in practice: A carrier cannot simply assert “it was a business decision” as a blanket defense for refusing to load export cargo. It needs to provide specific, documented reasons tied to the factors the FMC does consider: good-faith negotiation, legitimate transportation factors, and consistency with its documented export policy.

Why the Timing Matters

This ruling would have been significant in any market. It is especially significant in April 2026, when:

Emergency fuel surcharges are being layered on top of existing rates, making all-in pricing volatile and less transparent.
Capacity is constrained by Hormuz-related service disruptions, vessel reroutings, and blank sailings. When capacity tightens, the risk of carriers prioritizing certain cargo types or trades over others increases.
Equipment is being repositioned to manage the fallout from Gulf disruptions, meaning empty containers may not be available where exporters need them.
The FMC is already active on multiple fronts: monitoring China’s detention of Panama-flagged ships, tracking the impact of Middle East disruptions on U.S. shipping conditions, and overseeing OSRA implementation.

The appeals court ruling removes the legal cloud that hung over the FMC’s enforcement toolkit. The rule is no longer “under challenge.” It is settled law. The FMC can now use it in enforcement actions and complaint proceedings with full judicial backing.

The Non-Binding Factors the FMC Considers

The rule establishes non-binding, non-exhaustive factors for evaluating whether a carrier’s refusal was unreasonable. These include:

Whether the carrier maintained and followed a documented export policy
Whether the carrier negotiated in good faith
Whether the refusal was based on legitimate transportation factors (operational, safety, or commercial considerations that would affect any reasonable carrier)
Whether the carrier’s conduct was consistent with its stated policies and past practices
Whether the rate quoted was so far above market that it cannot be considered a good-faith offer

The FMC evaluates each complaint on a case-by-case basis. Not every refusal is a violation. Carriers can prove there was a reasonable basis for their decision. But the framework is now clear, and courts have confirmed the FMC has the authority to apply it.

What Shippers Should Know

You can file a complaint with the FMC. If you believe a carrier unreasonably refused to deal with you on vessel space, you can submit a complaint through the FMC’s online portal. The FMC also has authority to initiate enforcement actions on its own.

Document everything. If you are an exporter who has had bookings refused, rolled, or priced out of reach, keep records: the booking request, the carrier’s response, the rate quoted, the market rate at the time, any correspondence, and whether the carrier has a documented export policy on file.

Ask carriers for their export policy. Carriers are required to file these with the FMC annually. Knowing what a carrier’s documented policy says can help you assess whether their behavior toward your cargo is consistent with their stated practices.

This is not just for large shippers. OSRA was motivated in part by complaints from agricultural exporters and mid-size manufacturers. The framework applies to any shipper using U.S. outbound ocean carrier services.

Operational Note: Disputes over vessel space, rolled bookings, and rate reasonableness often come down to data: what was available, when was it offered, and what happened to the booking after confirmation. Shipment-level visibility that captures booking confirmations, vessel assignments, and milestone events creates a record that supports both operational follow-up and, if necessary, regulatory complaints.

What Carriers Should Know

Develop and maintain a detailed documented export policy. The court upheld this requirement. It is now non-negotiable for compliance. A vague policy is worse than no policy because it creates a documented baseline that can be compared to actual behavior.

Ensure pricing consistency. The FMC can now treat extreme pricing as evidence of bad faith. Carriers should ensure that export rate quotes are defensible relative to the market and consistent with their documented policies.

Train commercial teams. The rule’s factors apply to the behavior of the carrier’s representatives, not just headquarters policy. If a local sales team is refusing bookings or quoting disconnected rates, that conduct is attributable to the carrier.

Expect enforcement to increase. The FMC under Chairman DiBella has shown willingness to use its authority. The $22.67 million civil penalty assessed against MSC in a recent enforcement proceeding signals that the FMC is not treating compliance as optional.