An ocean carrier service contract is a written agreement in which a shipper commits to a minimum volume of cargo over a fixed period and the carrier commits to a rate and a defined service level. For a forwarder, the commitment in that sentence is the whole risk: the minimum quantity commitment (MQC), usually counted in TEU or FEU, is a promise you make before you know whether your customers will fill it. This guide explains what a service contract contains, how the US rules treat an NVOCC that signs one, how to size an MQC, and what happens when spot rates fall below your contract rate. It covers US trades, as the rules stood in October 2026. If you are the seller of ocean rates to your own customers, the companion post on NVOCC tariffs, NRAs and NSAs covers the other side of the table.
Spot rates versus contract rates
A spot rate is a price for specific cargo on a specific sailing, quoted for a short window and subject to space. A contract rate is a price fixed for a defined period against a volume promise. Neither is "better": they price different things.
- Spot moves with the market and carries no volume obligation, but gives no guarantee of space when the market is tight and is the first thing a carrier rolls (see rolled cargo).
- Contract gives rate certainty to quote your customers against and a stronger claim on space, but it ties you to a volume. When spot falls below your contract rate you are paying more than the market and still owe the volume.
The same trade-off appears from the shipper's side in our guide to tenders versus spot quotes. Many forwarders run both: contract for the base load on stable lanes, spot for the peaks and the one-off lanes.
What an ocean service contract contains
In the US, the statute (46 U.S.C. 40502) and the Federal Maritime Commission's Part 530 (46 CFR 530.8) list the terms a filed service contract must carry. Reading the list is the quickest way to learn what you are negotiating, and the commercial terms around it follow the same shape worldwide, though outside the US the filing rules differ.
| Term | What it means in practice |
|---|---|
| Parties | Legal names and addresses of the contract parties, plus any affiliates entitled to use the contract and the signatories. Many people call the customer the "named account"; that is trade usage, not a term Part 530 defines. |
| Origin and destination | Port ranges (port-to-port) or geographic areas (through intermodal). Check exactly which ports are in each range. |
| Commodity | The cargo the rates apply to. Cargo outside the description is not covered. |
| Minimum volume or portion | The MQC. It can be a quantity of containers or a share of the shipper's cargo or freight revenue. |
| Line-haul rate | The base ocean rate. Which surcharges are included, and which are added on top, must be spelled out. |
| Service commitments | What the carrier undertakes in return, such as space or a named service. How firm this is varies widely by contract. |
| Liquidated damages | The agreed cost of non-performance, "if any". This is where shortfall penalties live. |
| Duration | Effective date and expiration date. |
| Shipper certification and records | A certification of shipper status, and who will answer Commission requests about shipment records. |
Part 530.8(c) also requires the listed terms to be clear: they may not be "uncertain, vague, or ambiguous", and may refer to terms outside the contract only if those are readily available to the parties and the Commission. Treat that as a drafting standard even when you are not in the US: if you cannot say from the paper alone which surcharges apply, the contract is not finished.
The minimum quantity commitment (MQC) explained
The MQC is the volume you promise to ship during the contract period. Conventions worth knowing, none of which is universal, so read the clause rather than assume:
- Unit. Usually TEU or FEU. Contracts often state the commitment per trade lane or per service string, not only in total.
- Period. Commonly a fixed number of months or a year, sometimes tied to a trade's contracting season. Some contracts measure the MQC in sub-periods (quarters or months), which is far less forgiving than an annual figure.
- What counts. Check whether cargo moved under affiliates, on a different port pair within the range, or on a spot booking counts toward the commitment.
- Shortfall. The contract states what happens if you fall short. In charter-party language this is "dead freight"; Part 530 calls the agreed remedy liquidated damages. Whether the penalty is per unit short, a percentage, or a loss of the discount is a commercial term to negotiate.
- Cancellation. Under 46 CFR 530.10, a contract can be cancelled where the shipper fails to tender the minimum cargo (unless the carrier made that impossible). On cancellation, further implementation stops and cargo moved under the contract is re-rated at the otherwise applicable tariff, and accounts may be adjusted for liquidated damages. Read that as: miss the MQC badly enough and you can lose the rate retroactively.
A common misconception is that a service contract guarantees space. It guarantees what the service-commitment clause says, and nothing more. Carriers still blank sailings and roll cargo when capacity is cut, so read how your contract treats blank sailings before you rely on it, and understand which services run on shared capacity under vessel sharing agreements.
Can an NVOCC sign a service contract? What the US rules say
Yes, as a shipper. Two different parts of the FMC rules are involved here, and they are easy to mix up.
- Part 530 (service contracts) governs contracts between an ocean common carrier and a shipper. Its definition of shipper includes "an NVOCC that accepts responsibility for payment of all applicable charges under the service contract", and the statute defines an NVOCC as a common carrier that "is a shipper in its relationship with an ocean common carrier" (46 U.S.C. 40102). That is why a forwarder holding NVOCC status buys ocean capacity on contract.
- Part 531 (NVOCC Service Arrangements, or NSAs) governs contracts the NVOCC signs as the seller to its own customers. It is not the rule for the carrier contract. Read our NVOCC tariff and NSA post for that.
Three practical points from the rules as read in the eCFR in October 2026:
- The carrier must check you first. Under 530.6, if a contract party or affiliate is an NVOCC, the carrier must obtain proof of a published tariff and proof of financial responsibility before signing. The statute also bars a carrier from knowingly and willfully contracting with an ocean transportation intermediary that lacks the required tariff and bond (46 U.S.C. 41104(a)(12)). Have both documents ready.
- The rates stay confidential. The carrier files the contract with the FMC, and Part 530.4 holds filed contracts in confidence to the full extent permitted by law. The statute provides that a concise statement of certain essential terms (port ranges, commodities, minimum volume and duration) is published in tariff format, while the rate is not. Filing is the carrier's duty, due within 30 days after the effective date.
- You still owe the NSA rules downstream. If you pass the capacity on to a customer under a volume commitment, that is an NSA or an NRA in your own right, with its own requirements.
A forwarder that acts only as an agent for the cargo owner, without NVOCC status, is not in the shipper definition above, so check whether the contract should instead sit with the cargo owner. That is a question for the FMC or a maritime lawyer, not a guess.
What the Ocean Shipping Reform Act of 2022 changed for contract buyers
The 2022 Act amended the Shipping Act's prohibited acts, and the FMC implemented one of the pieces in 46 CFR Part 542, on unreasonable refusal to deal or negotiate over vessel space. Per the eCFR, it covers containerized cargo moving in the US trades and defines "unreasonable" as conduct that "unduly restricts the ability of shippers to meaningfully access ocean carriage services". Factors include whether the carrier followed a documented export policy, negotiated in good faith, and relied on legitimate transportation factors. Quoting rates so far above the market that they cannot be a good-faith offer is given as an example. Carriers must file an export policy with the FMC annually, and those filings are not public. The rule was published in the Federal Register in July 2024 and amended in June 2025.
What this does not do: it does not set a rate, force a carrier to sign a contract, or turn a missed sailing into a claim. It gives a shipper (including an NVOCC) a route to complain when a carrier will not deal at all. We have not confirmed other service-contract-specific rule changes since 2022, so check the FMC's current pages before relying on a particular change. The FMC's separate billing rules are covered in our guide to demurrage and detention invoices.
Shippers' associations and pooling volume
Small forwarders often cannot reach a carrier's volume threshold alone. The statute defines a shippers' association as "a group of shippers that consolidates or distributes freight on a nonprofit basis for the members of the group" (46 U.S.C. 40102), and Part 530 lets one be the shipper party to a service contract, with members not named individually unless the contract includes or excludes specific members. Two cautions:
- If an NVOCC is a member, Part 530.6 requires the carrier to obtain tariff and financial-responsibility proof for it, and an NVOCC joining mid-term must provide that proof before shipping under the contract.
- Informal "pooling" between forwarders, where one signs and the others ship under it, is a legal structure question. We found no FMC rule that blesses a particular arrangement by that label, so get the structure checked before you rely on it.
Co-loading between NVOCCs is a related but different arrangement, and an NVOCC tariff has to say how it treats it. For commercial context on negotiating with carriers, see rate negotiation with carriers.
How to size an MQC without over-committing
The mistake is committing to your forecast. Commit to the part of the forecast you would bet on, and keep the rest on spot.
- Sort volume by certainty. Firm programmes with signed customers, probable repeat business, and hoped-for new business are three different numbers.
- Commit to firm plus a discount on probable. Leave the hoped-for volume out entirely.
- Check seasonality. A flat annual MQC divided by twelve is not what your lane does. Peak-heavy lanes make a quarterly measurement dangerous.
- Know whether you buy for customers or for resale. If you hold a customer's committed programme and the contract mirrors it, the MQC is backed by a customer promise. If you are buying ahead to resell the capacity, the whole commitment is your inventory risk, and your resale price has to cover the chance you never sell it.
Illustrative example only, no real rates. Suppose a forwarder's customers have committed 100 FEU a year on a lane, a further 80 FEU is likely repeat business, and 120 FEU is hoped for. Committing to all 300 would be a bet on the hoped-for volume. A more cautious MQC might be the 100 firm plus some portion of the 80 likely (for example 50 to 60 FEU), around 150 to 160 FEU, leaving the rest to spot. The right figure depends on the shortfall clause: the heavier the penalty, the lower the commitment should sit.
The main risk: a contract rate above the spot market
When spot rates fall below your contract rate, three things happen together: your customers get cheaper spot quotes from competitors, your cost is fixed above the market, and your MQC is hard to fill because the customers go elsewhere. Ways to manage it, all of which are negotiation points rather than standard terms:
- Watch the market against your contract rate using the public benchmarks explained in SCFI, WCI, FBX and XSI, and test your cost base before the market has moved a full quarter.
- Ask whether the contract has a mid-term rate review, an index-linked element, or a volume tolerance band before shortfall damages apply.
- Keep customer quotes short, with clear validity and expiry, so you are not holding a fixed sell rate against a falling cost.
- Make sure you know which surcharges are inside the rate and which sit on top, so a customer quote does not absorb them.
What to do next
- Pull your last 12 months of volume by lane and split it into firm, likely and speculative.
- Collect the documents a carrier will ask for: tariff proof, financial-responsibility proof and the signatory details.
- Ask the carrier for a draft and read the MQC, shortfall, surcharge and service-commitment clauses line by line before you discuss the rate.
- Agree how you will review the contract against market indices during the term, and who decides when to renegotiate.
More than 29,300 logistics companies are searchable by country and service in the CargoLinked directory, which is one way to find carriers' agents and co-loading partners. The public requests board lists freight that shippers have posted for forwarders to quote on directly, which can help you gauge demand on a lane before you commit volume to it.
This article is general information, not legal, tax or financial advice. Shipping Act and FMC rules change and their application depends on your status and facts; confirm the current text with the Federal Maritime Commission or a qualified maritime lawyer before signing a service contract. Figures in the illustrative example are not real rates or forecasts.
