The New York Shipping Exchange received the $8.5 million in Series A funding from a coalition of capital firms led by Goldman Sachs Principle Strategic Investments and GE Ventures.
The New York Shipping Exchange (NYSHEX) said Tuesday it has received $8.5 million in Series A funding from a coalition of capital firms led by Goldman Sachs Principle Strategic Investments and GE Ventures.
NYSHEX is a digital exchange that enables shippers, freight forwarders and ocean carriers to engage in the consummation of forward freight contracts. The goal of the exchange is to get both parties in a transaction to agree to mutually enforceable contracts that penalize either side for failing to live up to the terms of the contract, using the industry’s standard contract format.
The contract is based on similar mechanisms used by stock exchanges and commodities exchanges.
NYSHEX said the benefits of the exchange for carriers are more certainty around future cargo flows to enable them to better plan vessel stowage, since the forward contract prevents no-show bookings. The exchange is also designed to empower more dynamic pricing. For shippers, forward contracts prevent carriers from rolling cargo, and also allows them to lock in fixed, unamendable rates for shipments.
“We are excited to be working with NYSHEX, and expect the exchange will create opportunity for shippers to improve supply chain planning and reliability,” said Mark Chadwick, executive sourcing lead at GE. “Carriers will improve vessel utilization and network planning, which will deliver efficiencies desperately needed in today’s challenging market environment.”
NYSHEX CEO Gordon Downes said NYSHEX has already engaged with five of the top 10 global ocean carriers, with shippers and forwarders “joining daily.” Downes and the venture capital firms emphasized that the exchange was designed by industry veterans and is intended to improve existing operations.
“By mid-year, we will be fully operational within the transpacific trade, and by end of year, we intend to be working collaboratively with our members to expand into the Asia-Europe trade,” he said.
Along with Goldman Sachs and GE, other investors to participate in the funding round include Blumberg Capital and Tectonic Capital.
“The point here is counter to the traditional tech ‘disruptor,’ rather NYSHEX was created to do something good for their industry,” said David Wolfson, a founding partner at Tectonic Capital. “NYSHEX will bring updated technology and digital to an industry that desperately needs stability – in these cases it’s better to be collaborative than disruptive.”
NYSHEX lands $8.5m in seed funding
