Page 11: of Maritime Logistics Professional Magazine (Nov/Dec 2017)

10 12

D o y l e

The digitalization of cargo bookings is moving forward.

… THE NYSHEX PLATFORM IS DESIGNED TO HELP SHIPPERS MAKE

RESERVATIONS AND TO REDUCE THE UNCERTAINTY TO CARRIERS AS A

RESULT OF SHIPPERS FAILING TO DELIVER THE VOLUME OF CONTAINERS

THAT THEY HAD PREVIOUSLY COMMITTED TO SEND. ADDITIONALLY,

THE CARRIERS ARE HELD RESPONSIBLE TO THE SHIPPERS WHEN THE

CARRIERS DO NOT LOAD THE CONTAINERS AS PREVIOUSLY AGREED AND

INSTEAD LEAVE CONTAINERS ON THE DOCKS.

charge but the shippers and NVOCCs must be pre-approved reason for this concern is that the shipper could perhaps manip- with NYSHEX in order to participate. ulate the market by increasing freight rates. The Commission,

In a nutshell, the NYSHEX platform is designed to help will also monitor the Board’s ability to revise any aspect of the shippers make reservations and to reduce the uncertainty to operation of NYSHEX including the forward contract, the trad- carriers as a result of shippers failing to deliver the volume of ing rules, and membership requirements; for example, changes containers that they had previously committed to send. Addi- made to NYSHEX’s legal and compliance protocols. tionally, the carriers are held responsible to the shippers when The Commission conducted a review of fled agreements the carriers do not load the containers as previously agreed under 6(g) of the Shipping Act. This entails determining (a.) if and instead leave containers on the docks. the agreement results in a signifcant reduction in competition

Shippers can book container slots on ships through an elec- (b.) whether it is likely to produce an unreasonable reduction tronic portal. The portal is monitored by NYSHEX to deter- in transportation service, or (c.) an unreasonable increase in mine whether the booking is fulflled by shipper and carrier. transportation cost. The answer is no to all questions; there-

The carriers and shippers negotiate and execute their own fore I voted to allow the agreements to move forward. contracts. The rules are clear: If either party fails to fulfll its NYSHEX is an early entrant to the concept of digitaliz- obligation, the shipper or carrier, depending on who is at fault, ing the maritime transportation and logistics chain. There are would forfeit between 30 to 40 percent of the agreed ship- start-ups attempting to form every day. NYSHEX has been at ping cost. This would be an automatically generated penalty it since around 2012, building its platform and digital portal, through the NYSHEX exchange eliminating the need for ei- running beta tests and pilot programs. It appears to be a plat- ther side to chase the other for the default payment. form that can be used effectively and be a useful, additional tool for the greater supply chain.

• Looking Ahead:

The Commission’s approval enables the carriers to take two rotating seats set aside for carrier representatives on the nine-

The Author William P. Doyle member governing board. Importantly, two other seats on the is a Commissioner with the U.S. Federal Maritime Commission. Doyle board will be flled by shippers. These seats would be flled by was named in December as The Dredging Contactors of America’s new either BCOs or NVOCCs.

Executive Director and Chief Executive Offcer (CEO). He is expected to

The Commission will monitor the NYSHEX agreement mov- assume that post in January. The thoughts and comments he expresses ing forward nonetheless. The FMC will need to monitor “forward here are his own and should not be construed to represent the position of the Commission or his fellow Commissioners.

exits” where a shipper obtains a proft on the resale of space. The www.maritimelogisticsprofessional.com 11I