Financing Win for New York Shipping Exchange


By The Maritime Executive 2017-08-22 19:43:05

The New York Shipping Exchange (NYSHEX), creator of the first digital forward freight contract for global container shipping, has completed its Series A round of funding with Hapag-Lloyd and CMA-CGM joined up, along with additional investments from GE Ventures and Goldman Sachs.

The investment now totals $13 million. 
Hapag-Lloyd, CMA CGM, MOL and OOCL are currently working with NYSHEX, which aims to bring on additional carriers to build a comprehensive global exchange.  
NYSHEX offers a simplified and standardized “over-the-counter” exchange for entering enforceable freight contracts. It is compliant with all U.S. regulations as well as the Federal Maritime Commission’s contract filing requirements. It is based on proven and relevant principles from the New York Stock Exchange, Chicago Mercantile Exchange and the London Metals exchange, says the company.
Buyers of container shipping services use NYSHEX at no cost. Initially, they must be pre-accredited with NYSHEX to get started. Ocean carriers pay a transaction fee of $5/TEU.
NYSHEX is different from traditional long-term contracts and spot market contracts. It claims a third option:

 * Predictable rates that lack the volatility of current rate practices
 * Rates that are all-in
 * Buyers pay liquidated damages for no-show containers
 * Carriers pay liquidated damages when the contract is not operationally fulfilled
 * Shippers can receive fixed rates, enforceable contracts, accurate invoices and a significantly more reliable supply chain, with above 99 percent reliability.

Carriers have 97 percent certainty in future cargo flows, enabling better vessel planning and uptake management, more dynamic pricing, and improved working capital, says the company. Mark Chadwick, Executive Sourcing Leader at GE Ventures, says: “NYSHEX is addressing some of the most fundamental problems facing the ocean shipping industry today – uncertainty and inefficiency.”

With its investment, CMA CGM, which already accounts for nearly 80 percent of its bookings by electronic means, meaning more than six million transactions per year, continues its digital transformation. Rodolphe Saadé, CEO, has made the Group's digitalization one of its four priorities. This was initiated in 2013, notably through the development of an e-commerce platform, which is now available, including in the form of a mobile application.

“CMA CGM welcomes the digital innovation that NYSHEX is bringing to the container shipping industry. Digitalization is essential to offering our customers new and differentiated products. This partnership is one more step in CMA CGM’s digital transformation, aiming to continuously create added value for its customers,” said Saadé.

“Hapag-Lloyd invested because we believe NYSHEX can help solve the challenge of unreliability and unpredictability that affects everyone in the container shipping industry, by ensuring commitments are met by both sides,” said Thorsten Haeser, Chief Commercial Officer of Hapag-Lloyd.
In March, NYSHEX announced $8.5 million in funding led by Goldman Sachs Principal Strategic Investments and GE Ventures, with participation from Blumberg Capital, Tectonic Capital and other investors.
NYSHEX was founded in 2015.