- The New York Shipping Exchange (NYSHEX) has received approval from the U.S. Federal Maritime Commission (FMC) for the contract structure and governance model employed in its efforts to establish a cargo shipping registration initiative, American Shipper reports.
- The FMC approvals address NYSHEX’s plan to people its governing board with four parties: two representing ocean carrier interests and two representing shipper interests.
- Signatories include cargo carriers Hapag Lloyd, CMA-CGM, COSCO and MOL, though just two representatives from the four carriers (or other lines which could become future members) may serve on the board of nine members at once.
The NYSHEX objective is to establish mutual contractual obligation between shippers and carriers, preventing space-wasting overbooking by shippers and sudden cancellations or rollovers on the part of carriers.
From its inception, NYSHEX quickly gained the interest of investors such as Goldman Sachs and GE Ventures, before advancing to receive further capital directly from shipping lines Hapag-Lloyd and CMA CGM.
Supporting agreements more than penalties, NYSHEX establishes forward contracts, which provide price guarantees for between a week to six months.
NYSHEX is gaining traction within the industry, and with the FMC approval, is set to establish itself high in the ranks of forward contract providers.
"The FMC filing enables us to implement our governance model," Gordon Downes, CEO of the New York Shipping Exchange, told Supply Chain Dive. "This gives all our members the assurance that NYSHEX operates in a compliant, fair and transparent way, and that we act in the interests of the carriers and shippers. We will now have four industry representatives on our board of directors, two of whom will represent the carrier interests and two of whom will represent the shipper interests."
Rate negotiation, so common among traditional freight forwarders, isn't part of the NYSHEX method.
"It is really important to highlight that the NYSHEX agreements specifically prohibit any discussion of rates, surcharge or accessorial by carriers," Downes said. "NYSHEX operates with free market principles, so fair and competitive prices are an essential component of what our members expect."
Now that the FMC is on board, it's easy to wonder whether NYSHEX will become a preferred forward contractor.
"The FMC approval allows NYSHEX to agree on fair standards for digital freight contracting. This helps NYSHEX to simplify the contracting process for all our members, helping them to capture the benefit of digital contracting," Downes said.