The Three Questions Everyone Asks About NYSHEX
By Don Chen
Article | Sun, Apr 28, 2019 | 6 Minute Read
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.
How are carriers pricing NYSHEX contracts?
In market economics, supply and demand balance dictates price. For instance, when supply exceeds demand for any commodity or service, there will be price incentives. When demand outweighs supply, prices rise.
In the past, shippers and carriers have really only had two ways of direct contracting: 1) long-term contracts negotiated once annually and 2) spot contracts which are historically 48% reliable. NYSHEX provides transparency as to the actual supply and demand of the market. Since NYSHEX offers are constantly fluctuating in line with the market, shippers can take advantage of real-time pricing AND achieve 98% reliability.
Does NYSHEX compete against NVOCCs?
The answer to this question, is definitely not. In fact, two of our top five trading members are NVOCCs. NYSHEX provides a brand-new procurement channel for NVOCCs and BCOs alike. Our NVOCC members utilize the exchange to lock in guarantees to set new business up for success with a new customer. As one of our NVOCC members put it, they use it to “save the day” during peak and times of poor schedule reliability when all shippers needed additional space options. Additionally, they use it to obtain instant rate offers and to purchase freight that is aligned with market dynamics. Our NVO and BCO members tell us that they can’t understand why any shipper wouldn’t want to take advantage of this guaranteed contracting option.
The proof for any innovator is in the numbers and we’re pretty proud of ours. I’ll close with a thank you to TOC Asia, and one final stat: 99.7% of those who make a first trade on NYSHEX come back to make additional trades.
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