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Shipping Doesn't Have to Be Groundhog Day

Have you ever seen that Bill Murray movie, "Groundhog Day?"  It's the one where the cynical TV weatherman finds himself reliving the same day over and over again.  He tries with all his might to make it work to his benefit but ultimately accepts that things are never going to change.  Well, that used to be my day job! 

Peak 2019: The Writing is Already on the Wall

When we started to plan for last year's TPEB peak season, all the signs of the makings of a tumultuous peak were written clearly on the wall. Now as we look at 2019, not much has changed.

  • First, in 2018 threats of increased trade tariffs were looming.  Yep, that’s still definitely the case in 2019.
  • Second, we saw no announced efforts to combat the worsening schedule reliability trends including late departures and blanked sailings.  With 35 blanked sailings having already been announced in 2019 and more vessels being laid up in Q3-Q4 for scrubber installation, we can confidently brace ourselves for the worst of the worst.
  • Third, last year shippers thought they knew what shipping in peak season would cost but all bets were off once peak arrived. Many shippers ended up paying over $1000 in Peak Season Surcharges (only for the front-loaded cargo to sit in a warehouse for months). For 2019, many shippers have agreed to capped Peak Season Surcharges.  However, as accurately pointed out in a recent JOC article, “carriers will fill limited slots with containers that pay a PSS before containers that don’t.” Ocean Carriers have also been vocal that they will, out of necessity, pass on 100% of the fuel/IMO 2020 costs, therefore the vast majority of contracts now include floating bunker. The fact is, the jury is still out in 2019 as to what impact all of this will have on ocean freight over the coming six months.

At least we're in international logistics because we love a challenge! And, even in the midst of last year’s turmoil there were still winners in the race.  Making your direct service contracts as ironclad and robust as possible; that’s table stakes.  There were two key things that last year's peak winners did:

Finance execs: Do you realize this happens within your supply chain?

I joined NYSHEX about two years ago and this is my first experience within the shipping industry. Accurate forecasting, precise financial planning and keeping costs low are all incredibly critical aspects of my role and what keep all finance and accounting executives up at night. I've been completely shocked by the opacity inherent and unique to shipping freight procurement. This post is intended to share some of the key learnings I’ve obtained since joining the industry and how such learnings could be utilized by the accounting or finance decision-maker of a company shipping containerized ocean freight.

Trust in shipping is making a comeback! But what’s NYSHEX got to do with it?

Back in 1823, the shipping markets were characterized by “wild gambling”. To combat this, the Baltic Exchange was established as a private meeting room where admission was strictly limited to trustworthy merchants and shipowners. Their motto enshrined this principle as “our word, our bond"(1)

The Three Questions Everyone Asks About NYSHEX

Earlier this month I got the chance to present to hundreds of shippers, 3PLs and other industry stakeholders at the Terminal Operators Conference (TOC) Asia event in Singapore. I spoke to NYSHEX's progress thus far and our future trajectory, then I participated in a panel on digital innovation. The crowd engagement was so high that I wish we had had another hour for just the Q&A. These are the main question themes raised at TOC Asia and the ones I hear wherever I go.

There are plenty of platforms and digital solutions available now in the industry. What makes one stand out from another?  

There are indeed many digital solutions in the market - booking platforms, forward contracting, digital forwarding, digital marketplaces - you name it. Just because something is digital, doesn’t mean it adds value or solves a pain point. Therefore, many are skeptical and overwhelmed in today’s logistics environment which has seen unprecedented venture capital injections from firms outside of the industry.

At NYSHEX, we have a lot of features that make current processes more efficient, but our mission is unlike any other in our industry. We fix the brokenness of contracting. Today, ocean contracts are not enforceable and getting a booking doesn’t mean you get on a ship and depart on time. Furthermore, getting a quote can take days, it is difficult to compare one carrier’s ocean quote to another’s, and there is no certainty as to what your rate will be when the ships get full. At NYSHEX, we address all these challenges by providing shippers with a transparent, guaranteed contract that is backed by financial penalties if breached. The great news is that, across tens of thousands of containers, these contracts remain 98% reliable! That’s a number unrivaled in our industry.