The objective and game-changing platform for carrier-shipping contracts: NYSHEX
At the very sharp end of global trade, where the buyer and retailer interact, there is a great deal of emphasis placed on what’s become known as the customer experience. It’s a catchall term that encompasses a range of factors — from ease-of-use, quality, and a certain reliability that as soon as money changes hands, the contract between the two parties is successfully seen through.
Therefore, it seems odd that supply chain disruptions can effectively tear down such a careful construct. Both shippers and carriers play their part in issues that make logistics operators appear less attractive to many global retailers. Some of them have even developed their own logistics operations to get around what’s seen as intransigence and systemic failings in the shipper-carrier relationship.
Over the years, it’s become apparent that shipping contracts only have a fufilment rate of between 60% and 70%. For an outsider to the industry, that’s an astounding statistic, one that seems to have little place in a world where carefully honed customer experiences are a critical differentiator between competing companies. Of course, the carrier-shipper market’s complexity is challenging to comprehend for anyone not immersed in that world: from trucking costs in China, to fuel prices at US ports, to changing tariffs and tax rates — this is not a simple situation where there are good guys and villains. Throw in recent consolidation activity in carriers and the significant impact of COVID on world trade since 2020, and it becomes apparent that there are substantial challenges in logistics that need to be surmounted.
As you might expect on the pages of a site that’s focused on the technology that underpins many verticals in business, we are highlighting a solution to the more intractable problems experienced by all parties in two-way ocean contracts. NYSHEX is a cloud-based platform that’s run by independent (and therefore objective) parties where the vicious circle of shipper-carrier contracting mismatches becomes a virtuous circle.
Firstly, it’s worth examining the people behind NYSHEX. In many cases in different specialist industries, we’ve seen technologists present a solution to an industry that’s too simplistic to gain significant traction. Essentially the problem here is usually that the development of an IT system has not involved industry professionals with long and deep experience within the space. A roll-call of board members and investors at NYSHEX reads like a who’s who of shipping and carrier expertise. Those individuals behind the project bring years of experience in the industry and combine with some of the brightest minds in technology and development. The resulting platform is a collaboration that has the capability to transform the industry.
We’ll be looking in more depth at NYSHEX and how it works in practical terms in a further article (watch this space), but essentially the platform acts as a shared area between shippers and carriers for data, backed by financial guarantees of contractual completion, overseen by a completely objective third party.
Carriers allocate equipment and space as required and commit to contract terms. The shipper’s contracts can be with one or more of six carriers using the same boilerplate (NYSHEX will supply templates as starting points if required), and agreements on how exceptions will be resolved are made upfront by all parties. The technology ensures contractual (and data security) compliance, and NYSHEX guarantees performance or positive resolution. The organization states that if cargo doesn’t move according to contract, it will guarantee that any financial penalties or MQC reductions outlined in the agreement are enforced in conjunction with the NYSHEX Member Handbook.
This open and up-front approach means both carrier and shipper expectations and obligations are clear from the outset and form the basis of better performance (and repeat business) for all concerned. Electronic data integration (EDI) between all bodies means updated information is presented in the open, so tracking prevents damage to relationships.
At Tech HQ, we feel the word “disruptive” in contexts like these are overused, and as pure-play technologists ourselves, we don’t feel qualified to announce a world-shifting platform’s arrival. But the NYSHEX offering is the type of technology that we’ve seen to be incredibly effective in other areas where complex contracts, multiple parties are involved, plus — as is the case for carriers and shippers — there is a reasonable degree of second-guessing, hedging of bets and unpredictable outcomes.
The NYSHEX solution with its objective resolution of exceptions and guarantees looks set to be a unique solution to this aspect of supply chain logistics that can have significant repercussions on end-users. The customer experience aspect of much global trade today looks set for an improvement in continuity. Look out for the next article in this series, or if what you’ve read here sounds exciting, look to the NYSHEX FAQ page for some quick answers to your queries, or get in touch with the organization in the first instance. This looks positive and intriguing.