Dunavant is a 60+ year-old family-run operation that attained its leader position in global shipping through a history of bold first-adopter strategies. Take for example their move in the 1950s to become the first to go into “forward contracting” of cotton. It’s no surprise that this company with its gaze fixed firmly on the future was one of the first adopters of NYSHEX.
Like many NVOCCs, Dunavant is challenged by supply chain uncertainty caused by the unreliability of ocean space and equipment availability. Even though they are a sizable global logistics provider, it can still be hard for them to secure space during peak periods.
A second challenge faced by Dunavant is shared by NVOCCs throughout the industry. Many logistics providers fear that container shipping is becoming commoditized, a move which detracts from the essential role freight forwarders play as providers.
Dunavant sees NYSHEX as a creative solution to the reliability issues in container shipping today, as well as a new way to provide value to their customers.
“If an ocean carrier rolls cargo due to space issues under a NYSHEX contract, we now have some recourse and both sides of the transaction have a financial interest in the success of each shipment,” David Underwood, LCB, Vice President, Global Operations explains. There is accountability on the part of the shipper to execute their shipments as booked, along with the pressure for both shipper and carrier to follow their agreements. This allows each party to have a unique stake in the process that was lacking before.
In addition to providing the solution to Dunavant’s space and reliability needs, they believe NYSHEX can help solve major industry issues. “Having a centralized forum where carriers and shippers can communicate in a neutral environment encourages a win-win outcome for both parties and that is the direction that the industry is headed,” Underwood says.
“I think what they’re (NYSHEX) providing is going to be necessary in the future to help facilitate global trade while still allowing BCOs, freight forwarders and NVOCCs to excel within their fields of expertise.”
In contrast to some fears among forwarders that NYSHEX commoditizes freight services, Underwood sees just the opposite. “From our experience, NYSHEX isn’t trying to commoditize the ocean shipping market. There is a value-add being offered by the stake each shareholder has on both sides of the transaction – shipper and carrier, to mutually execute their agreements.”
“We’re facing a global shipping market that has fewer carriers now than ever, and the next step for us (NVOCCs) to differentiate ourselves is in the form of more predictable service with more secure vessel space, rate transparency and equipment accountability.”- David Underwood, LCBVice President, Global Operations
NYSHEX is playing an increasing role in Dunavant’s ongoing pursuit of alternatives to traditional non-binding ocean contracts. They see a market for selling their clients a space-guaranteed premium service through NYSHEX.
“For an NVOCC, it’s a matter of finding a client willing to look at this option from a service perspective, and convincing them to use it at the very least as a strategy to hedge against risk within their supply chain,” Underwood says.
“There are viable win-win opportunities out there that would be ideal for a NYSHEX contract such as peak season and pre-Lunar New Year cargo, where the premium ocean freight expense is willingly paid by shippers to get the space support they need.”