Dive Brief:
- ONE is joining the New York Shipping Exchange (NYSHEX), a digital freight marketplace for ocean shipping, according to a press release on Thursday. It will begin posting select offers for Transpacific Eastbound trade in December for sailings in January 2020.
- NYSHEX includes CMA CGM, COSCO, Hapag-Lloyd, HMM, Maersk Line and OOCL among its membership, which it says encompasses 60% of the industry’s global capacity. The organization’s goal is to act as a neutral contract arbiter for shippers and carriers in an attempt to prevent canceled bookings and cargo rolling.
- “Having our customer’s commitment to show up with their cargo as contracted, allows us to optimize our network and more accurately plan our vessels, which in turn provides more cost effective and reliable services,” Sundeep Sibal, senior vice president of Transpacific and Transatlantic trade at ONE, said in a statement.
Dive Insight:
Cargo rolling is a significant challenge for the ocean shipping industry, where “it is not uncommon to see overbookings to the tune of 30%,” Silvia Ding, global head of ocean products at Maersk, said in a statement. “Often this leads to rolling of the customers’ cargoes since there is overbooking to compensate for the high downfall.”
By contrast, NYSHEX’s digital contracts have a fulfillment rate of 98.4%, according to the release. The organization touts its role as an unbiased arbiter of contract violations or defaults, and the associated penalties, with creating increased reliability for shippers and carriers. It is also preparing to include support for new, customizable contract terms that allow for multiple origins and destinations, in addition to longer validity periods.
“NYSHEX contracts are governed by a transparent Forward Contract boiler plate standardized across all carriers, and supplemented by an exhaustive ‘rule book‘ outlining every eventuality,” Kimberly Cockrell, VP of sales and marketing at NYSHEX, wrote in a blog post. The rule book can only be amended on a consensus basis involving representatives from the organization’s shippers and carriers.
For shippers that overbook, NYSHEX helps sell the excess containers in a secondary market. “Let’s say a shipper has contracted for 100 containers for a particular week and then, as the sail date approaches, they realize they only need 80. That shipper can re-post the 20 containers they don’t need anonymously back onto NYSHEX,” Cockrell writes. Once the transaction is finalized, the original shipper can earn a profit and is released from the original contract without negatively impacting the carrier.
Digital freight marketplaces are becoming increasingly popular in the industry, with carriers such as CMA CGM, Hapag-Lloyd and Maersk offering online freight booking and transparent pricing services in an attempt to make operations more efficient and reduce rolled cargo. This level of digitalization has become “table stakes” for ocean carriers, according to Eytan Buchman, chief marketing officer at Freightos, a digital marketplace for shipping and freight forwarding.
The next step, which NYSHEX seeks to leverage, is harmonizing systems to create a reliable one-stop shop for enforceable contracts between major players.
