16,500 miles, 200 bright shippers and 5 dead wrong misconceptions about NYSHEX.
I’m now in my fourth month with the New York Shipping Exchange and I’ve been burning up the road in the name of enforceable ocean freight contracts.
When I say burning up the road, I mean 16,500 miles! I’ve been back and forth between coasts (twice), all over the Midwest and am now gearing up for a trek around my familiar stomping grounds of the Southeast and Gulf. Look out Europe and Asia. You’re next!
I’m proud to have sat with over 200 shippers in the last four months talking about their supply chain challenges and how NYSHEX can help. It’s such a privilege to get to know each and every one of them.
The response has been stellar. I can count on one hand those who do not think an impartial third party adds value to ocean freight contract execution. There is a clear desire by all of us to have the industry we love hum along like a finely tuned University of Alabama offense (Sorry, had to. It’s football season!)
I have, however, entered many meetings with shippers who had an inaccurate perception of what the New York Shipping Exchange is all about. The feedback I keep receiving once those are put to bed is “this is actually much better than what I thought it was.” Based on my interactions, here are the top misconceptions about NYSHEX.
Misconception 1: NYSHEX is a digital NVO.
Not true. Our carrier partners publish offers directly onto the exchange and the forward contracts which shippers purchase on NYSHEX are directly with the ocean carrier. When you boil it down, NYSHEX is simply there to enforce the contract. We handle the FMC filing, freight payment disbursement and ensure both parties follow through with their end of the deal.
Misconception 2: NYSHEX is only a vehicle for short term rates such as vessel top-up campaigns.
Not so much. Our carrier partners are placing a portion of allocation from each weekly vessel onto the exchange, from one week to six months out into the future. For example, NYSHEX members exporting agricultural products can now contract freight through December, whereas previously they only knew their freight cost for the current month. Our carriers do occasionally run short-term campaigns on the exchange but it is the forward rates which give shippers supply chain stability.
Misconception 3: Long-term contract rates will always be lower than NYSHEX offers.
Not always. The truth is that NYSHEX offers are valid for a specific timeframe, and only for a limited number of containers within that timeframe. Furthermore, a shipper buying a NYSHEX contract guarantees that they will show up, which helps the carrier forecast. To put it a different way, NYSHEX contracts are the equivalent of a passenger buying a non-refundable ticket, whereas today’s service contracts are like buying a fully flexible ticket. Sometimes you will pay more for flexibility.
Misconception 4: Using NYSHEX will weaken direct carrier relationships.
No way! Our members say that using NYSHEX has strengthened their relationships with carriers. Having an impartial third party monitor shipment milestones and protect both parties’ interests allows shippers to focus on their supply chains while NYSHEX manages the transfer of default penalties. We work closely with both shippers and carriers to make sure neither party defaults, which breeds trust. Furthermore, with NYSHEX, our members are still the shippers of record on the B/L which means their carrier and trusted sales executive are still serving them directly.
Misconception 5: There is not currently a need for NYSHEX since global capacity exceeds demand.
Wrong. We’ve talked to shippers the world over. For cargo booked on long term service contracts, 7% of shipments are rolled or declined. In the spot market it’s closer to half. Since inception, one container booked through NYSHEX has been rolled (and that shipper was paid a penalty). In all my years in the shipping industry I’ve never seen anyone getting paid when that happens!
If you’ve read all of this, then I’d love for you to leave a comment with what you think you know about NYSHEX. We’ve built our company around conversations with all sides of the shipping industry, so let’s keep it going. I believe in what we are doing and want the market to fully grasp how awesome this can be for all of us.
Interested in learning more about NYSHEX? Schedule a demo with a member of our sales team!