FMC Judge Orders OOCL to Pay $45.6 Million in Landmark Bed Bath & Beyond Shipping Case

Three years after bankrupt retailer Bed Bath & Beyond accused Orient Overseas Container Line of auctioning off contracted vessel space to higher-paying cargo during the pandemic supply chain crisis, a Federal Maritime Commission administrative law judge has ordered the carrier to pay more than $45.6 million in reparations in a closely watched ruling with potentially broad implications for ocean shipping contracts.

In a 203-page initial decision issued April 24, Chief Administrative Law Judge Erin Wirth found OOCL violated multiple provisions of the Shipping Act, siding with claims brought by the retailer’s bankruptcy estate following Bed Bath & Beyond’s 2023 Chapter 11 filing and liquidation. 

The ruling awarded $45.6 million in reparations, well below the $165 million sought, but significant nonetheless for what it says about carrier obligations under service contracts during periods of extreme market disruption. The judge found violations tied to unreasonable practices surrounding service commitments, service not provided in accordance with contract terms, retaliation, and refusal to deal, while rejecting separate claims involving detention and demurrage.

The decision marks a remarkable turn in one of the earliest and most prominent shipper complaints to emerge from the pandemic freight boom, when importers accused carriers of prioritizing soaring spot rates and premium surcharges over long-term service commitments.

At the heart of the case was whether carriers could effectively sideline contract obligations when supply chains were under stress and freight markets overheated.

The FMC’s decision says no. Citing long-standing FMC precedent, Wirth found ocean carriers must equitably apportion available space among contract customers even when demand exceeds supply, concluding OOCL’s conduct crossed into unlawful territory.

“The evidence shows that OOCL did not make a good faith effort to make available to BBBY the space which it had promised,” the decision states, finding the carrier’s space allocation practices failed to reasonably allow the retailer to use contracted capacity while steering cargo toward higher-priced alternatives. 

Bed Bath & Beyond alleged in its original 2023 complaint that OOCL provided only about 70% of contracted capacity in 2020 and just 52.9% during part of 2021-22, forcing the retailer into the costly spot market as it struggled financially ahead of bankruptcy.

The ruling also carries potentially broader implications for the treatment of service contracts under the Shipping Act.

OOCL had argued many claims amounted to breach-of-contract allegations outside the Commission’s authority. The judge rejected that view, finding the dispute raised broader statutory questions about unreasonable practices and carrier conduct squarely within FMC jurisdiction. 

Because the ruling is an initial decision, it remains subject to Commission review and possible appeal. But it already stands as one of the most consequential private Shipping Act cases in recent years — and a notable signal from the FMC that pandemic-era market chaos did not suspend carriers’ contractual obligations.

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