Dive Brief:

• Maersk Line on Tuesday became the sixth major carrier to join the New York Shipping Exchange (NYSHEX), lending further credence to the forward freight contracting startup.
• The NYSHEX platform allows shippers to digitally contract with carriers, who guarantee the shipment of their product. Such contracts, which include penalties on both shippers and carriers, seek to minimize risk by eliminating the fear of an overbooking or cargo no-show.
• The news marks a milestone for NYSHEX, as users of the platform can now book on carriers representing all three global ocean freight alliances and 52% of the world's capacity, according to the press release.

Dive Insight:

NYSHEX only began its Series A round of funding in August 2017, but it is already beginning to look like an established player in the shipping industry.

The contracting platform has not only raised $13 million with GE Ventures and Goldman Sachs as lead investors, but also counts Maersk Line, CMA CGM, Hapag Lloyd as investors. The merging COSCO and OOCL are also part of NYSHEX, as well as the soon-to-be-ONE MOL.

Since that includes almost every major carrier on the market, this means a NYSHEX participating shipper should be able to book on nearly all global services thanks to the slot sharing agreements provided by 2M+H, Ocean Alliance and THE Alliance.

But the startup's success lies not just in its members, rather it is thanks to the idea upon which it was founded.

NYSHEX's forward contract aims to help shippers and carriers avoid the volatility of spot market rates, all the while providing guarantees of transportation to stop the "vicious cycle" of cargo no-shows and rollovers.

Its contracting model — which has already been approved by the Federal Maritime Commission — specifies volume, departure date and destination while placing steep penalties if carriers or shippers do not meet their end of the deal. Solving this problem is a $32 billion opportunity, according to Crunchbase. 

That the startup was able to gain these top carriers' buy-in in just nine months is both a testament to the severity of the shipping industry's no-show/rollover problem, and its push fo greater collaboration among actors in the supply chain: from shippers to ports to carriers.

"The time is now to create a more collaborative environment for all participants in the ocean transportation industry," Omar Shamsie, president of Maersk Line North America, said in a press release. "That is why we're excited to begin piloting NYSHEX's processes and technology in North America starting March 2018 to increase visibility and certainty for shippers which we hope will result in a better end-to-end experience for our customers."