The Top Five Use Cases for NYSHEX
By Kimberly Cockrell
ocean freight contracts | Wed, Feb 12, 2020 | 6 Minute Read
Team NYSHEX was over the moon to end 2019 with 374% growth. For us, it was another confirmation that our members are finding true value in guaranteed contracting! In fact, we frequently hear, "we should have done this sooner?"
It is a journey, however. Changing old industry habits takes time, and I speak with a lot of shippers at various stages. I'm often asked, “how are other shippers utilizing the Exchange?”
Here are the top five ways shippers are utilizing the Exchange and how any BCO or NVOCC can extract tangible value.
1) Hedge against volatility
Those who have been in shipping for a while know that there is typically an embargo, bottleneck or new surcharge just around the corner to throw even the best logistics plans for a loop. Some of the largest shippers in the world are hedging against price and service volatility by purchasing monthly or quarterly contracts on NYSHEX. No matter what happens, they breathe a little easier with fixed space, equipment and rates for a percentage of their overall volume, and can use it to offset any cost increases or minimize the overall impact of service disruptions.
2) Prioritize cargo
Liquidated damages cover increased costs when shipments don't move according to contract. However, our shipper and carrier members tell us it's not the default compensation they're after when opting to use NYSHEX. They want the cargo they've planned to move that week to show up, and sail on-time. As such, our carrier members have implemented detailed operational execution plans to flag and protect NYSHEX shipments. The factors that go into determining what goes and what is left quayside in a rolling scenario vary from carrier to carrier. Having cargo flagged as a NYSHEX shipment, however, is one of the top ways to consistently catch the boat.
3) Keep freight spend on target
Shippers budget their freight spend based on a carrier allocation plan consisting of the lanes awarded to each carrier and the corresponding freight rates. If inconsistent service or lack of capacity requires the shipper to switch the awarded volume to a back-up carrier, odds are it will be at a higher price and the whole freight budget compromised. Through our newest enhancement, members are leaning on NYSHEX for customizable two-way performance obligations, impartial resolution of issues and real-time visibility into mutual contract performance to keep their direct carrier contracts, and plan for freight spend on track.
4) Purchase spot allocation quickly and efficiently
Importers and exporters alike tell us that oftentimes their merchandising teams notify them of new sourcing origins with little notice. It can take days or a week to obtain, compare and file rates. Our members appreciate the standardized, all-inclusive pricing across multiple carriers of NYSHEX contracts, and clarity of freetime and other terms. The technology furthermore enables them to purchase weekly, monthly or quarterly space digitally and quickly.
5) Enhance carrier relationships
Many of our members, like this one, tell us their carrier relationships have flourished since introducing NYSHEX. When a carrier knows exactly what a shipper is willing to commit to, the value of doing business together is evident. The contract is no longer just a list of rates. There is an alignment of expectations that both shipper and carrier are working toward, which is necessary to keep goods moving.
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