Transforming Ocean Shipping: How NYSHEX's Innovative Platform Drives Supply Chain Efficiency

I interviewed Gordon Downes, the founder and CEO of NYSHEX, an innovative company providing technology solutions to address major challenges in the ocean container shipping industry. With 80% of the top 10 ocean container carriers and many shippers already using the NYSHEX platform, it has significant implications for reducing expected lead times, lead time variance, safety stock, and out-of-stocks for shippers, while also enabling carriers to utilize their equipment more efficiently.

What impressed me about Gordon is how his 12 years of experience at Maersk, the world's largest ocean container carrier, combined with his time at SABMiller/AB InBev, the world's largest beer shipper, gave him unique insight into the problems facing both carriers and shippers. From the carrier side, he saw how no-show bookings and overbooking led to vessels sailing underutilized. From the shipper perspective, he witnessed the costly consequences of containers arriving late.

Eight years ago, recognizing that other industries had solved similar problems using technology, Gordon founded NYSHEX to collect, cleanse and harmonize data from various supply chain partners to provide a shared system of record. This enables carriers, shippers, NVOCCs and 3PLs to all have the same set of facts to identify the root causes of problems, rather than relying on incomplete information and engaging in blame games that strain relationships.

Some of the key problems NYSHEX addresses include determining what went wrong when a container doesn't show up as planned - was the container not loaded, picked up late, or documentation not produced on time? The platform captures data on all the steps prior to container movement, not just basic visibility, to provide a complete picture. It then generates alerts and workflows to flag at-risk containers while there is still time to take corrective action.

By improving planning, execution and communication across the supply chain, NYSHEX reduces waste that negatively impacts both carriers and shippers, such as vessels sailing light and shippers facing production delays. Carriers benefit from better vessel utilization, reduced workload dealing with exceptions, and strengthened customer relationships. Shippers gain the ability to provide carriers with more reliable volume forecasts to secure space and equipment allocations.

I see huge potential for shippers to leverage the rich data and analytics from NYSHEX to optimize inventory, similar to what happened in the quality management era when businesses redesigned processes to eliminate sources of defects. With granular data on transit time distributions and delay patterns that were never available before, shippers can reduce safety stock while improving service levels. This can free up significant amounts of capital, especially important in the current high interest rate environment.

While change is hard in an industry that operates on processes largely unchanged for decades, Gordon emphasized how the value NYSHEX delivers is a true win-win. By focusing first on tactical, tangible problems to demonstrate results, then expanding to more strategic issues over time, the company has steadily grown to processing 2% of global container volume, with ample room for further growth.

I'm excited by the potential of neutral, third-party platforms like NYSHEX to foster trust, transparency and collaboration that lifts performance for all supply chain participants. With the industry's structural challenges not going away, I believe we will see accelerating adoption of such solutions to enable the responsive, resilient and efficient supply chains required for success in today's turbulent business environment.

Episode Transcript

Speaker 1 (00:10):
Welcome to the Matt Waller podcast, where we look at
success at the intersection oftechnology, logistics, supply
chain, retail and CPG, alsoknown as the retail value chain.
I want to clarify that thispodcast is distinct from my
responsibilities as a professorin the Sam M Walton College of
Business.
Nonetheless, it aligns with myaspiration to provide practical

(00:31):
insights to professionals andbusiness by showcasing companies
and people that can enhanceyour ability to manage, lead and
strategize and marketeffectively and the retail value
chain.
Before we dive into today'sexciting episode, I'd like to
thank our sponsor, new RoadCapital Partners.
New Road invests in proventechnology services and products

(00:54):
that serve unmet needs in themarketplace.
They look for companies insupply chain and logistics, as
well as consumer-orientedcompanies.
For more information, go tonewroadcpcom.
I would also like to disclosethat I am a strategic advisor to
New Road.
I'd also like to recognizepodcastvideoscom for the

(01:18):
services they provide for thesepodcasts.
I'm very pleased with theirservices.
And now, without further ado,let's get into the exciting
episode.
Today I'm interviewing anincredible entrepreneur and
leader, gordon Downes, who's thefounder and CEO of Nyshex.
I think you're going to findthis very interesting.

(01:39):
V he has 80% of the top 10carriers ocean container
carriers engaged in using Nyshex, their platform.
Many shippers are using it.
The implications for it areincredible.
It can help shippers reducetheir expected lead time for

(02:02):
ocean container shipping, reducetheir variance of lead time.
It can help shippers reducesafety stock, reduce
out-of-stocks, so it's veryinteresting in that regard.
But it also helps carriersutilize their equipment more
efficiently.
But Gordon had many years ofexperience before he started

(02:26):
Nyshex and in fact he had about12 years of experience with the
largest ocean container shippercarrier, Merce, and then he had
many years of experience withthe largest beer shipper in the

(02:46):
world, abnbev.
It was SAP Miller back then.
But he saw the problems fromboth ends of the supply chain,
from being a carrier and frombeing a shipper.
But he also had a goodunderstanding of other partners

(03:12):
in the supply chain, how theseproblems were occurring with
them, such as third-partylogistics firms, nvoccs, etc.
And so eight years ago he tookto coming up with an information
system to collect all of thisdata, to cleanse it, to
harmonize it and to make itavailable to everyone in the

(03:33):
supply chain.
I think you're really going toenjoy this conversation, gordon.
Thank you so much for joiningme today.

Speaker 2 (03:42):
It's a pleasure.
I'm happy to be here, so,Gordon.

Speaker 1 (03:46):
I was really excited to learn about NYSHEC's really
interesting company and ofcourse I'm familiar with your
background.
I already described it earlier,but you already had a pretty
significant experience inlogistics industry.
So if you wouldn't mind talkingjust a little bit about what

(04:09):
motivated you to found NYSHEC'sbut also how your experience led
up to that.

Speaker 2 (04:18):
Yeah, that's a long story, but I'll paraphrase it.
I started my career at Merckand while I was at Merck I was
fortunate enough to have lots ofdifferent roles, and I think
most relevant was the time Ispent in the trade function, and
when you work as a trademanager or a line manager at a
carrier, you're responsible formanaging the vessels, the P&L,

(04:41):
making sure that you've got theright cargo mix, and it's an
interesting role.
One of the biggest challengesthat I experienced in that role
was we would plan our vesselsand our services based on
contracts we had with ourcustomers, and very often those
contracts didn't materialize.
The bookings would be made andwould be canceled and all of a

(05:02):
sudden you've got vessels thatare sailing underutilized or
services that aren't meeting theexpectations you have, and that
has a big impact on your profitand loss.
It's also wasteful just havingvessels sailing around with
empty space, so that was, for me, quite interesting, and also
interesting in the sense thatthe way we dealt with these
challenges was we would overbookthe ships so that you can

(05:23):
accommodate a little bit of whatwe would call downfall or
shortfall.
The problem is, of course, younever get it right, and there
are many times we would overbookthe ship and suddenly there's
more cargo showing up for thevessel than what was expected,
and all of a sudden you've gotwhat we call a role or leave
customers on the key side, andof course that again is very
damaging for the customer, andso there are a lot of challenges

(05:45):
that I've experienced workingin the line function, but that's
just the way the industryoperates.
I think most carriers operate inthe same way as we used to
operate at Merck, and then Ialso spent three years at a
company called SAB Miller, whichis now part of the ABMBF group,
and there I was involved indigital transformation, but of
course, very much later on inthe transportation side of

(06:08):
things the procurement and thesupply chain and it was
fascinating to see how damagingthose situations are when you're
a customer.
Again, when I worked at Merck, Ihad a very clear sense of the
issues from a carrierperspective, but it really
struck me once I was at SABMiller and you could see how
damaging it is if, for instance,contain a load of cans that are

(06:29):
going to feed your canning linefor a brewery in a specific
location, get delayed and all ofa sudden the consequences are
very costly, and so this isclearly one of these situations
that is both negative for thecarrier and negative for the
shipper, and that challengereally piqued my interest and
caused me to go down a longjourney of exploring how other

(06:52):
industries have solved some ofthese problems, because,
candidly, these problems haveexisted in other industries for
years, but many of the otherindustries have solved these
problems.
So we looked at that andultimately that inspired me to
start MyShakes as a way to tryand help this industry solve
those type of problems.

Speaker 1 (07:07):
So that's really interesting.
Having both sides having workedon ocean shipping from a
carrier perspective and theshipper perspective helped you
see opportunities and, of course, one of the biggest, most
important aspects of being anentrepreneur is understanding

(07:30):
what is the problem, and so yousaw it from two sides.
Could you elaborate a littlebit more on the problems you
were saying?

Speaker 2 (07:41):
Yeah, so the big problem really manifests itself
in when the containers don'tshow up, and that of course
creates waste in the system.
But the challenges go deeperthan that.
The challenges are really it'snot when the container doesn't
show up, it's all the thingsthat should have happened before
the container shows up thatperhaps didn't happen.

(08:02):
And, compounding that is, it'sactually often quite difficult
to find out where the problemtook place.
So I'll give you an example.
There are, of course, as youknow, with the supply chain.
There are many links in thesupply chain, many parties
involved in the process, andoftentimes you'll find,
especially in the case ofimporting from another country,

(08:22):
something will go wrong withthat origin.
Maybe the container didn't makeit to the port on time, and
it's actually quite difficult toknow.
Was it because the containerwas late being loaded at the
warehouse?
Was the cargo not ready?
Was the warehouse notfunctioning?
Or was it the trucker thatdidn't get the container into
the terminal on time?
Was it some of thedocumentation that needed to be
produced in order for thatcontainer to actually make its

(08:43):
way into the terminal and ontothe ship?
And you're relying often onsecondhand information, third
parties who are telling you whathappened, and again it's not
just one container whereeveryone's watching it.
In many cases these contractsinclude thousands of containers
and many different origins and,of course, many different
stakeholders involved in theprocess, and so it can become

(09:05):
really complicated to see whatwent wrong.
And again that results in a lotof workload to try and dig into
it, do the forensicinvestigation to find out what
actually went wrong here, oryou've got to speak to multiple
people.
And then what often happens ispeople tend to attribute parts
of the problem to others, and itdoes create a little bit of a

(09:26):
blame game, and that creates abig strain on relationships,
especially in an industry likeours where relationships matter.
If the trucker says, well, Itried to gate it into the
terminal, but someone at thecarrier gave me the wrong
information, I mean, that's justone silly example, but there
are many others like it, and soyou do end up oftentimes with
people blaming one another, andthen it's hard to really get to

(09:48):
the source of the problem, toidentify the recalls and then
actually make improvements ifyou don't really have all the
facts.
So this is a challenge that is Ataking a lot of work, b putting
a strain on relationships, butI would say, most importantly,
it's creating waste.
Waste when a shipper can't gettheir container on the vessel
and suddenly they've got aproblem where they're for

(10:09):
example, their canning line isat risk because the cans are not
available, or for the carrier.
Waste in the sense that yourplan for these containers to
sharpen your vessel, you heldspace for them and all of a
sudden they don't show up andnow your vessel is sailing,
underutilized.
Of course that's just wasteful.
So now there's a great deal ofcomplexity in these problems and
again solving these problems atscale becomes very, very

(10:34):
challenging.

Speaker 1 (10:35):
Yeah, I mean, this reminds me a little bit of the
quality management era.
You know where there, you know,there was a movement to really
identify sources of problems andeliminate them, to redesign
business processes, but you'relooking at a global business
process that really hasn'tchanged much for decades, so I

(11:00):
would think that changingsomething like that is even more
difficult, obviously, andthere's a lot of players
involved, as you're saying.
So how does the Nyshek'splatform help address those
problems?

Speaker 2 (11:18):
So our approach to this has been trying to provide
what we call a shared system ofrecord, so that both the carrier
and the shipper, as well as the3PL or the NBO whoever might be
involved in the process has oneversion of the facts, and it
makes it easier to see where theproblems are.
Now, of course, creating thatshared system of record is

(11:38):
challenging because, once again,data is stored in different
pockets throughout the supplychain, and again, data is one
thing, but how you interpret thedata, how you turn that into
information and in analytics andinsights, different companies
can do that in different ways,and so that is also very
challenging.
So we spend a great deal oftime really focused on capturing

(12:01):
all the right data and beingvery transparent and thoughtful
in how we analyze and displaythat information so that both
parties can look at it andrecognize that it's a very
important thing.
And, of course, there'selements of us being neutral and
us providing transparencywithout having any sort of

(12:21):
incentive one way or the otherto show one circumstance versus
other circumstance, and so, inorder for us to accomplish that,
we had to spend a great deal oftime gathering data from the
different sources, for instance,taking the scheduled data from
the carriers, the booking data,the equipment events, having
shippers provide information,perhaps about their purchase
orders, about the request thatthey've made for their bookings,

(12:44):
and that's a growing list ofdata sets.
And what's important to keep inmind here is that we're looking
at data which is not justrelated to the movement of the
clock.
You know the traditional senseof you know where is my stuff,
the basic visibility.
Now, that's, of course, veryimportant, but just as important
as that is all the steps thatneed to be taken prior to the

(13:04):
container actually moving.
So that includes things likewas the, was the vessel on time
and or was the vessel subject todelays or potentially a port of
it?
Was the booking requested ontime?
Was the booking requestedwithin the allocation?
Did the carrier have thatallocation reserved for that
customer or not?
And so there's a great deal ofstep that we need to track

(13:27):
beyond just the movement of thecargo.
And so piecing all thatinformation together, and then
not just piecing it together buttranslating it, harmonizing it
so that anyone has a sharedsystem of record that they
recognize, is a big piece of thesolution to this challenge.
And then, of course, havinginformation is one thing, but we
all know about supply changesthat you cannot possibly manage

(13:50):
every single purchase order orevery single container.
You really do have to manage byexception.
So critical piece of this puzzlehere is building not just the
shared system of record, thedata, the visibility, but also
the workflows that allow ashipment or a booking or a
vessel that's off track, tocreate alerts so that the people

(14:11):
who need to know something isoff track get notified, and,
furthermore, a workflow suchthat the person who is informed
hey, this container is not yetgated into the terminal, or this
booking should be made by now,but it's not being made by now
and then the workflow hopefullytriggers action that allows the
process to get back on track or,at the very least, captures the
reasons why this process willgo on track.

(14:33):
And that's really importantbecause the more reasons you
have, the more you can start tosee patterns.
And again, it's shared.
So the patterns are sharedacross all the parties in the
supply chain and that allows atroubleshooting process to begin
which is not based on, like wedescribed before, that sort of
playing game that can veryeasily happen in this industry.
So there's a great deal offocus on, like I said, the

(14:54):
shared system of record, theworkflows that are laid on top
of that shared system of recordand again, the analytics that
are laid on top of that set ofworkflows and the underlying
data.

Speaker 1 (15:04):
So I could.
I could see how thesenotifications could be really
valuable, you know.
Again getting back to thequality management analogy here,
in quality control the goal isto try to not only identify what

(15:26):
caused problems, but tosometimes identify problems
before they manifest themselvesin real problems.
Does this have the ability todo that?

Speaker 2 (15:38):
Oh, precisely, and that's a huge part of, I think,
the value that can be createdfor everyone and the ecosystem
is using the system.
You know, once again, it's acomplex supply chain and there
are many different stakeholdersand ultimately, the stakeholders
do create dependencies on oneanother.
The challenges informationdoesn't always flow as well as

(15:59):
it should.
I mean, people always joke.
If you work in shippinglogistics, you're dealing with
enormous amounts of emails andit's hard to stay on top of
everything and there's a lot ofnoise and the data and so on.
So we're trying to remove allof that, and one of the, I think
, really exciting innovations iswe have this inside of this
application, inside of ourplatform, called the exceptions

(16:19):
hub, which is a constant livestream of all the things that
are going on track.
Now, of course, that's great,but in addition to that, we also
have alert management, so a,for example, logistics director
can go in and describe what Ishould say, select different
types of issues Say, for example, origin issues, where a

(16:40):
container is at risk of notgetting in at a specific
location and assign thoseexceptions to a specific user in
their ecosystem, and then whatwill happen is the application
will automatically email thatspecific user when we notice
something is at risk of notgetting in.
And of course you might say,well, people get too many emails

(17:02):
as it is.
Do we really want to have evenmore emails going?
And of course there's truth inthat, but the hope is the email
that the system can generate.
We can curate that over time.
In fact, we've already seensome great, great progress in
this regard, so it becomes trulyvaluable.
So when the logistics operatorcomes to work in the morning,
one of the first things they getis a daily digest of all the
things that they need to payattention to, and so it's neatly

(17:25):
laid out, very easy to see.
You know what type of issueneeds to be dealt with.
And a couple of innovationswe've added on top of that.
The first one is, if there'sany questions about what the
issue is, they can click on thelink Inside the email and it
immediately takes them to ascreen where they can see
exactly what has happened so far.
They can see changes in thevessel, changes in the booking,
changes in the equipment status,etc.

(17:46):
So all of that information isavailable literally on one click
.
And furthermore, if they takeaction and they say OK, this
specific container is now beinggated in.
Or I called the trucker andthere's a problem.
The trucker has a flat tireInside the body of the email.
They can click a link and,without having to even log into
the application, they canclassify this as a closed issue

(18:08):
and they can update the reasonwhy it was closed.
And so, again, we're not askinga user to create more reports or
more emails.
We're actually trying tosimplify this and create one
summary where it's easy to keeptrack of all the issues or the
exceptions that may be coming upduring the course of the day.
And so, coming back to thepoint, managing these exceptions

(18:32):
really requires, number one,the information to be available
in very timely fashion, ofcourse, which we're doing, but,
more importantly, it requiresthe person who needs that
information to get it to be ableto declutter the information so
that they know what to focus on, and also to create workflows
so that it's clear what stepsthey need to take in order to
solve the problem.
And so we've seen a great dealof success in helping people

(18:55):
identify these problems whilethere's still time to fix it and
get the shipment back on track,if that's the case.

Speaker 1 (19:02):
So the users of Nyshex are the carriers and the
shippers.

Speaker 2 (19:09):
Correct.
We actually in fact, have morethan just carriers and shippers.
We work very closely withNBOCCs and, of course, NBOCCs
can act as a carrier and as ashipper, and in many cases they
will do both for the sameshipment.
We also work with 3PLs and thegoal is to be able to add more
stakeholders in the supply chainto the application.
And, of course, I think one ofthe big benefits here is by

(19:32):
serving information to peoplethat is truly valuable in a
curated fashion, where it'saction-oriented, it's timely.
We can do that by email.
We don't even need people tolog into the application.
You can literally create valueby reaching out to people and
instruct them to wait throughthe email.
So, yeah, the goal here is toreally make this, to ensure that
everyone who has a role to playin fulfilling these contracts

(19:55):
making sure that the cover movesaccording to plan is available
or at least able to see what'sgoing on in this shared system
of record, and we're creatingvalue for them by reducing
workload and creatingtransparency.

Speaker 1 (20:08):
Yeah, making it so easy with just an email, I think
, has probably been prettycritical, I would guess, to your
success.
Is that right yeah?

Speaker 2 (20:20):
no, that's right and it sounds very simple, but it's
actually very complicatedbecause, again, you have to
strike that balance of showingpeople information which is
relevant to them, and you can'tomit important information,
because if you do, you losecredibility.
But by the same token, if youoverload the email and you put
too much information about theseevents in there, the noise

(20:42):
tends to outweigh the benefitand you lose credibility if
people don't pay attention.
So striking that right balanceis really important.
Plus, of course, there's a lotof technical elements in this as
well, because if you're askingpeople to update the status of a
system in the email withouthaving to log into the
application, you have to do alot of work with tokenization to
make sure someone can click abutton in the body of the email

(21:05):
and we automatically update thesystem without necessarily
authenticating that user througha login process.
So there's a lot of complexityinvolved in making this work,
but it's well worth the effort,because when it does work it
really does unlock a great dealof value and makes it very easy
for a shipper to be able tobring people from their supply
chain onto the network.

Speaker 1 (21:26):
So which players did you get on first?
The shippers, the carriers, theNVOCCs?
How did you sequence that?

Speaker 2 (21:38):
So this is really a chicken and egg sort of problem,
because, again, you can't solvethis problem with only one side
of the equation.
You really do need everyonewho's involved in the process to
be involved.
So the way we began was workingwith carriers, shippers, nvoccs
, and we would host theseworkshops even before we had a

(21:59):
product that was working, andtogether, in these workshops, we
would outline the key processes, the as is and the to be, and
agree on things that needed tobe provided, perhaps on a
multi-carrier basis.
We agreed on things where therewas currently a challenge with
regards to data availability, achallenge with regards to could
the data be trusted, etc.
And so that's how we started.

(22:20):
So we were really verydeliberate about making sure
that, the way we addressed theseproblems, we did so in a
fashion whereby we brought boththe carrier, the shipper and, of
course, the NVO we could act asboth capacities along the
journey with us.
In fact, we've done this at agreater scale now that we're
operating it much lighter extentthan what we did when we began.
By Number one, we have boardmeetings, and at our board

(22:42):
meetings we have carriers andshippers represented on the
board.
We have this thing called amember council, which is a
council that ultimately rolls upinto the board, that addresses
our roadmap and helps us makedecisions on what things to
prioritize, how to tackle issues.
And then we also have forums,in a much larger format than
what we did before, where webring in the carriers, the

(23:02):
shippers and other stakeholdersin the process and let them work
with us and work with eachother on how to address some of
these issues.
So again, unfortunately,there's not a simple answer.
You can't tackle this problemby just addressing one side of
the industry.
You really have to bring theindustry along the journey of
solving these problems.

Speaker 1 (23:21):
I would think you know for a shipper they would
really be interested in thisbecause you know, especially
with interest rates being high,the cost of capital is high and
so you don't want to have tohold extra inventory and the
kind of things you weredescribing would be a way to

(23:43):
reduce lead time, expected leadtime and the variance of the
lead time, and so both of thoseyou know.
The longer the expected leadtime, the more cycle stock you
need, the higher the expectedvariance and lead time, the more
safety stock you need, and thelonger lead time too, the more

(24:07):
in transit inventory you have.
So I could see a solution likethis could actually free up a
lot of capital for a shipper, Iagree.

Speaker 2 (24:19):
I think that there is a lot of opportunity to just
improve not just the reliabilitybut in general the efficiency
of the process, the resilienceof that supply chain as well.

Speaker 1 (24:31):
And you know, having all this data available and
being able to identify what isthe source of the problem, you
could create histograms to seeyou know where are these
problems occurring the most andthen you could prioritize which
ones you go after.
And you know, these kinds ofconfusions that occur in a

(24:57):
supply chain as a result of allthese variances result in a
bunch of communication thatfollows that many times never
gets anywhere because no onereally has the same set of
information.
Do you actually see that playout in practice?

(25:18):
Oh, absolutely.

Speaker 2 (25:22):
I can't tell you how frequently we speak to either
shippers or carriers or NBOs andthey would describe the process
of their quarterly businessreviews and typically the first
portion of the quarterlybusiness review is a discussion
around whose data should be usedto base the conversations upon,
because oftentimes the shipperwill show up to a quarterly
business review with one set ofthe facts and set of reports and

(25:46):
analytics and the carrier willshow up and those might not
necessarily match, especiallywhen you get into some of the
more complicated issues.
So again, it's one thing tolook at total containers moved
Now that's pretty easy to alignon but the hard part is for
those containers that didn'tmove, which should have.
Why and what are the patternsto your point around histograms,

(26:06):
and it's not just looking atwhat percentage of containers
arrived on time or were gatedaround time, etc.
It's looking at, you know,basically, that distribution
curve, that history of thehistogram, and then starting to
assign the causes for thingsthat might have been outside of
whatever the control parametersmight have been.
So again, all of thisinformation is now starting to

(26:28):
be produced in a way which isshared between the carrier and
the shipper.
All of the analytics are shared.
So the shippers version of thescorecard is exactly the same as
the carriers version, and sothat really does allow the focus
to be on how do we jointly, aspartners, dig into these issues
and come up with solutions,versus an argument around, well,
should I fix the problem orshould you fix the problem?

(26:49):
And that's something which is,I think, very constructive and
widely appreciated.
And, coming back to your point,that really is the only way you
can significantly improve thehealth of the supply chain and
make it more resilient, reducethe unnecessary waste, build
contingencies in when there arethings that you should expect
based on previous patterns, etc.

Speaker 1 (27:11):
Solving this problem would have implications
throughout the entire supplychain, because not just the
ocean carriage piece of it,because I think you know when a
container arrives late or isn'ton the ship when I'm supposed to
be, that creates all kinds ofother problems in transportation

(27:37):
at Draige, intermodal warehouse, labor management, driver
management and, of course,stockouts.
I mean stockouts are you can.
Actually earlier I was talkingabout it from the perspective of
freeing up capital, but maybeeven bigger and soldered the

(27:59):
streets, especially whenindustries are at capacity,
which so many are, at least inthe United States.
So if you have a containerthat's late, sometimes you're
losing sales for good.
You're not.
It's not like it's delayed,it's a lost sale, not just a
backorder, and there's a lotmore lost sales compared to

(28:22):
backorders today than there usedto be.
I know a lot of the peopleprobably involved in this part
of the process may not bethinking about those things, but
it actually could be thebiggest savings in the whole
process.

Speaker 2 (28:40):
I completely agree with you.
We've done some analysis onthis, and if you can make just a
tiny improvement on the amountof inventory or in terms of the
fulfillment rate, the OTIF, thevalue is enormous.
I think the challenge is thatsome of these values are not
necessarily understood acrossthe supply chain or all the

(29:02):
stakeholders who need to takeaction, and so there's an
element that we need to make iteasier for people to appreciate
the value that they can gain byimproving on some of these
processes, et cetera.
But I think there's alsosomething very interesting here,
matt, is that in order torealize that value, you need so
many different people in thesupply chain to act differently,

(29:24):
so it's not as simple as theexecutive who looks at the
analytics, makes some decisionsand provides instructions and
all of a sudden, these problemsget solved.
It really is a combination ofimproving the planning process
not just making better plans,but how you communicate those
plans, and not just the planitself, but the why behind the

(29:44):
plan, all of those componentsaround the plan, and that is
incredibly difficult.
Once again, many differentstakeholders involved in that
process.
And then the second part is, ofcourse, once the plan is in
action, it's all about theexecution process.
Are people following the plan?
And, of course, we all knowthat not every plan can be
followed.
Ships get delayed, vesselsblank, et cetera, et cetera.

(30:05):
When that happens, what arethose contingencies and how are
those things being tracked?
So the way we look at this isin order to get the big price,
which is, of course, makinggreater supply chain resilience,
improving OTSF, reducinginventory levels, improving sort
of performance ratios.
In order to get that, youreally have to be excellent at

(30:26):
planning and interlating onthose plans and you really have
to be excellent at execution ofthose plans, and so that's a big
part of how we think about thisopportunity and helping people
to benefit from using technologyin both parts of those
processes the planning andexecution process.

Speaker 1 (30:41):
Well, I have to say I'm really impressed.
I know you started this companyaround eight years ago but I
know your experience both fromthe shipper and carrier
perspective to see the problemand also helped you kind of
think about how to overcome theproblem.
But I would think that I meanyou're eight years into this and

(31:09):
I know you've made incredibleprogress.
You have a functioning company.
But it must have been reallyhard early on to try to get
people to even listen to you, Iwould think.
Was it?

Speaker 2 (31:24):
Yeah, well, to be honest, most people who work in
the industry experience thepains, the same pains that I
experienced when I worked atMerck and when I worked at S&P,
mother, and I think if you canpresent an opportunity that they
might be able to reduce some oftheir pain, usually people will
listen.
And so, again, when we started,I think it was very helpful for
me, having come from theindustry, because I had, so to

(31:48):
speak, walked in people in thisindustry shoes before and I was
able to bring a somewhat freshperspective, combining the ship
of you, the carrier of you, thetechnology of you, and I think
that is what gave people the, Ishould say, the incentive to pay
attention.
And, of course, the key for uswas, once we had people's

(32:09):
attention to solve problems thatwere very tangible.
So we didn't start off with thebig, really high level hard to
reach problems because it's hardto get to those.
So we really had to begin withthe tactical things.
And even today, when we workwith shippers who are not
familiar with the technology, alarge part of the sell is really
hey, these type of issues.

(32:30):
For example, when you placebookings and the carrier doesn't
confirm your bookings becausemaybe the carrier doesn't have
the allocation in their system.
We can help you solve thisproblem.
Well, this issue that you havearound you don't know which
carrier you want to allocateyour volumes to in your next
round of tenders because youdon't have all the data around
the carrier's actual performance.
Once again, it's very easy tolook at the carrier's vessel

(32:52):
schedules and see how reliablethe vessels are, but actually
that's not what's important.
What's important is, when youtry and book with that carrier,
are you getting the space onthat vessel?
Is the carrier giving you theempty equipment?
And then, once your container'son that vessel, what is the
actual risk of delay gettingthrough the terminals?
The risk of being stuck on theother side and potentially
incurring detention and demerit?

(33:13):
So, solving those reallytactical problems.
And then once you demonstratevalue there, you almost get the
license to be able to expand thevalue proposition and say, okay
, well, now that we solved thisproblem, let's look at some of
these other problems we cannotsolve.
And, to be honest, the reallychallenging part is, if you want
to solve even the most tacticalproblem, you can't just solve

(33:34):
it for one person.
That's the thing about supplychain.
There are inherently multiplestakeholders involved, not just
within a company.
For example, within a company,you've got to deal with the
person who's going to approvethe financials to pay for the
service.
You've got to work with theperson who's doing the planning,
the person who's deciding onwhich carriers to use.
You've got to deal with theperson who's placing the
bookings, et cetera.
You've got to get all of thesepeople to agree not only to use

(33:57):
the system but to actually useit once the system is
implemented.
So there's a lot of, I would say, hard work required in order to
get this sort of process moving, but I would say it gets easier
once you have some proof pointsunder the belts and you can
point to case studies, and thereare many shippers out there
that have experienced the valueof this and that makes it easier

(34:17):
with both credibility and, ofcourse, when we build the system
, the product, as we call it,starts to generate, I would say,
credibility in its own mind.
So it definitely is a process.
It's not something that you cando overnight with some
whiz-bang technology and drop itinto our industry and all of a
sudden, things work better.
I think it's a game of interestand it really has to be a game

(34:41):
of producing value, each step asyou move forward.

Speaker 1 (34:45):
So the shipper benefits are very obvious to me.
What are the carrier benefits?

Speaker 2 (34:54):
So this is the beauty .
I think that when you have anindustry like ours where there
is essentially a waste in thesystem for example when a
container doesn't make it on aship that should have it costs
everyone right.
The carrier has a ship that'ssailing in light and the shipper
now has a problem where thecontainer's not on the vessel.
And now the shipper either hasto face a delay or potentially
incur some contingency coststhat should put the back up
carrier or, even worse, airfreight.

(35:16):
So this type of waste producesopportunities for everyone.
It truly is a win-win outcomehere.
So, specifically on the carrierside, how do they benefit?
Well, I think the carrier'sbenefits fall into the same
three buckets that a shipperbenefits fall into.
So the first one is, of course,by helping a shipper perform
better on their supply chain andbe better at planning and

(35:40):
better at execution.
It means that the shipper ismore likely to show up for the
vessel within the cutoff timeand that allows the carrier to
benefit from better utilizationon the vessel.
In fact, if the carrier hasmore conviction or, I should say
, a reliable forecast from theshipper, or can forecast with
greater certainty what volumethat shipper is going to produce

(36:02):
, the carrier is able to betterserve that shipper.
They can make sure that thoseanti-containers are reserved for
that shipper, that allocationand the vessel ship is reserved
for that shipper.
And essentially this is veryimportant for carriers because
they actually really want toprovide great service to their
customers.
It's just hard when you'reoperating these massive networks
and there's so much variationin the processes and it's hard
to anticipate what's going toshow up.

(36:23):
But those shippers who can bemore reliable become what's
called a shipper of choice andit's much easier for a carrier
to service those customers andof course the carriers benefit
just as much as the shipperbenefits.
The other bucket of value is onworkload.
When you have a situation wherethings are not going according

(36:44):
to track, then the carrier hasto rework that booking or they
have to call up the shipper andfind out what happened to this
container.
It was supposed to get inbefore the cutoff.
All of that is work.
And then they've got to replanthe ship based on the containers
that should have shown up butdidn't show up.
So there's all this workloadthat gets put into these
processes when they go off track.
So reducing that workload forthe carrier is significant and

(37:06):
again going really into thetheoretical here, but it's
important because I think peoplein the industry will recognize
this.
The relationships betweencarriers and shippers often get
strained because of informationjust doesn't flow and it's so
easy for someone who works for ashipper based out in Ningbo
hypothetically to blamesomething that goes off track on

(37:27):
a carrier because it's justeasy to do that and whether or
not that's the truth, it oftenends up being the sort of the
default answer like carrierdidn't have equipment or carrier
rejected booking, and of coursewhen that happens it starts to
strain the relationships betweencarriers and shippers.
But if you can create a worldwhere both the carrier and the
shipper are looking at the sameset of facts, are able to

(37:48):
identify the problems, I thinkwhat we have seen is carriers
are very willing to accept thatwhere they have areas to improve
they'll take action and look toimprove that.
As long as it's fair and Ithink it's true also for a
shipper if they can see thatthey've got a problem with their
urgent team isn't gatingcontainers in on time, you know
they can take action to solvethat.
And when both parties areworking together to sort of

(38:09):
streamline steps in the process,it creates enormous value.
And not only enormous value,but it strengthened those
relationships between thepartners, and that's something
which, again, people who work inthis industry put a big premium
on.

Speaker 1 (38:22):
So what do you see as the biggest growth
opportunities for NYSEX in thefuture?

Speaker 2 (38:29):
So, again, our focus is exclusively on solving
problems for carriers, shippersand NBOCCs.
Our mission really is to unitethose parties with a shared
system of record and all thetechnology that we can provide,
and we've been very much focusedon solving this problem of
performance.
That is our core focus rightnow and truth is, we're just
scratching the surface of thatproblem space.

(38:51):
You know, then last year 2023,we were we processed 3.2 million
TEUs, which is around about 2%of the total market.
So and again in that period,we're able to show an
improvement on contractfulfillment of about 20%.
So that's a big improvement anda lot of opportunity.

(39:12):
And, of course, we have a lotof opportunity to expand beyond
just 2% of the total market.
So that's a huge part of ourfocus is just executing on the
strategy that we have todaygetting more carriers, shippers
and NBOCCs to use this sharedsystem of record to benefit from
the workflows, to furtherenhance the workflows and the
analytics.
But beyond that, you know,perhaps in the longer term,

(39:34):
there's opportunities for us tolook more carefully at things.
Like you know, the theinvoicing process, there's a
there's a lot of it's called itunplanned expenses in the
process for a shipper andthere's a lot of difficulty for
carriers to project what theirrevenues might be.
So there's an opportunity forus to work together with the
carriers in the ship is toimprove this invoicing process.

(39:56):
And one interesting fact here,just generally speaking, across
the industry a quarter ofinvoices are disputed and that's
because it's so difficult tosee what was actually agreed
between the parties, whatactually happened, these
unplanned expenses, thesecontingencies where they
justified.
It's a huge challenge.
But by once again using thisconcept of the shared system of

(40:19):
record all the data in one placethe carrier and the shipper and
the NBOCC can all trust what'sin.
They can all contribute to thatdata.
It allows those things to beimproved and so there's a big
opportunity in that respect.
And there's also opportunitieswithin the financial flows
within this industry.
Again, it's a it's an enormousindustry.
It's about $200 billion worthof freight payments back and
forth each each year and, ofcourse, many, many multiples of

(40:43):
that in terms of cargo valuethat's being shipped around this
around the planet.
And so there's opportunitieswithin the financial flows and
we're excited to explore those,but those are more longer term
down the road.

Speaker 1 (40:54):
I would think you would have some unique
visibility to the overall leadtime, to like changes in the
expected lead time of oceancontainer shipping in general.
Standard deviation of that.
It seems like you I know you'veonly got 2% right now that's

(41:18):
still a lot.
I mean 2% is actually quite alot.
Are you able to see changesoverall that are going on in the
industry?
Say, for example, you know theproblems we're seeing in the in
the Middle East.
It's causing problems withcontainer shipping through the

(41:42):
Red Sea.
What do you see the impact ofthat in your data?

Speaker 2 (41:48):
We do, but I think it's an interesting point that
you brought up, because there'sa there's a really critical
piece of our business modelwhich I should just disclose
here, and that is we don't ownany of the data that gets
processed on our systems.
It really is owned by thecarriers and the shippers and
the invoices, so we're not ableto produce any reports or

(42:08):
indexes on what's happening inthe market.
Again, we could do that, Isuppose, if the carriers and the
shippers and the invoicesagreed, you guys should go and
produce these benchmarks to helpthem perform better, and that's
something, of course, if our,if our members wanted, we can
produce that.
We really are focused onhelping individual carrier and
shipper relationships, orcarrier and invo and shipper

(42:30):
relationships, to perform better, and so, yeah, whilst we do
have that information, this isnot information that we're
leveraging, we're not promoting,we're disclosing that beyond
the parties who actually ownthat.
How did you come up with thename?
Nice shirt?
So that's a.
That's a long story, but I'llsummarize it.
When we started the company, welooked at a lot of different

(42:52):
industries that have had similarproblems to the one that the
container shipping industry has,but one of the most compelling
cases was some of the industries, like agriculture, some of the
financial markets, like bonds,and so we believe that some of
those mechanisms, the exchangemechanisms, may be relevant to
our industry, and so that's whywe started off with the name

(43:13):
exchange.
One quick carve out.
I think a lot of people in ourindustry believe strongly and I
agree with this, that containershipping is not a commodity
completely agree, it's verydifferent to a commodity.
But the concept of an exchangeexists beyond just commodities.
There are all types ofdifferent exchanges out there,
so I just have to, of course,make that disclaimer.

(43:33):
But, that said, why then NewYork at the beginning of
shipping exchange?
And the answer to that is, ofcourse, we knew that this
solution that we're developingrequires a lot of different
things, but two very importantthings being one, technology,
and therefore you need greatengineers, and two, support from

(43:55):
the financial industry, and sotherefore you need proximity to
the big banks, the big financialinstitutions.
So, very quickly, on theengineering side of things,
there are engineers all aroundthe world, but there and of
course there's a lot of greatengineers out on the West Coast,
for example, silicon Valley,but that's a set of engineering
skills which is generallyinvolved in some of these, like

(44:18):
social media, consumer, likeUber, for example type of
applications.
When you look at engineers thatare based in New York,
generally speaking they indexmore towards large scale
enterprise engineering skills.
For example, there's a lot ofengineers that work in the
financial services industry, andthose type of large scale
enterprise skills that exist inthe engineering base in New York

(44:42):
are really important for us,because our technology is used
by carriers and shippers andNVOCCs around the world.
They need to trust that theinformation they put in the
system is secure, they need totrust that the system isn't
going to be having uptime issues, and so those type of
enterprise skills are criticalfor us, and so having a position

(45:03):
in New York where we can hiregreat engineers that have
experience working big banks etc.
Is a really critical piece ofthe puzzle.
And, of course, the last point,as I mentioned, was the
financial industry.
So, again, we spent a lot oftime studying these different
industries, looking for patternsthat could help us to try and
solve some of the challenges weface.
In the shipping industry, thekey part of the solution when we

(45:25):
came up with it was looking atthe way that, for example,
goldman Sachs played a role inthe formation of so many
wonderful companies that haveplayed an enormous role in the
financial industry.
So you take, for example, theIntercontinental Exchange, which
was essentially a consortium ofbig banks like Goldman Sachs

(45:45):
and some of the other big banks,as well as some of the big oil
players like Shell, bp, tartell,and they were able to build
together a mechanism thatcreated enormous value for all
the participants in the oilmarket.
So our ability to raise aSeries A from Goldman Sachs they
let our Series A they're stillvery active in the company today
really helped us to tap intothat deep pattern recognition

(46:10):
that exists within those type ofindustries and apply those
patterns back to our industry.
So New York was very important.
Shipping exchange is veryimportant.
You put those two together youget New York shipping exchange
and of course that's a realmouthful.
So we just abbreviated and saidmy checks, that's the name we
go by.

Speaker 1 (46:28):
I think it.
I like it.
I mean, I think my checks.
When I first saw it I thoughtis this an exchange I'm not
familiar with?
I was thinking, I was trying tothink through it, but it seems
to give some credibility.
I like it.
Good name.

Speaker 2 (46:45):
You know, just picking up the thread on
credibility, the category ofshipping exchanges is rather
nascent.
There are about fivesignificant shipping exchanges
around the world today, so itisn't that well known, but
recently in June of 2022, therewas a new act passed in

(47:09):
Washington DC called the OceanShipping Reform Act, or OSRA 22
for short.
And what's interesting there isin that act?
There was a provision thatestablished shipping exchanges
for the first time and provideda definition for shipping
exchanges, and then set out thatthe Federal Maritime Commission
should regulate shippingexchanges in a similar way in

(47:29):
which, for example, theCommodity Futures Trading
Commission regulates commodityexchanges and the ACC regulates
securities exchanges.
Now shipping exchanges have aformal definition in the
legislation and be a formalregulator, which is, of course,
I think, very prominent andestablishes a great deal more

(47:51):
credibility in the function thatshipping exchanges need to play
in this industry.

Speaker 1 (47:55):
So, Gordon, if I'm a shipper and I'm using this
technology, what does it do?

Speaker 2 (48:04):
Yeah, that's a great question, Matt, and the way to
address that question is just toput on the table first what are
the three questions that wehelp a shipper to answer.
The first question is what wasexpected.
The second question is whatwent wrong.
The third question is what todo now, and the fourth question
is how well it all went.

(48:25):
And so we've built ourtechnology around specifically
helping shippers to answer thosefour questions.
So on, the first question iswhat was expected.
So here the technology, theproduct has some really powerful
features, the first of which isa what we call dynamic plan.
So the shipper can log into thesystem.
They can see the historic data,what was shipped with each

(48:48):
carrier, they can see what lanesor that value was shipped on,
and inside the system, they canproduce a forward-looking plan
Very easily.
They can do it in theapplication or they can use
Excel to upload and downloadtheir plan.
And we overlay that with whatare the allocations that they

(49:08):
may have been granted by theircarriers, what are the
contractual commitments thatthey may have, et cetera.
So that what we call dynamicplan is a very effective way for
a shipper to have a forwardview as to what they plan to
ship not only with each carrierbut with each origin on each
week and to communicate thatinternally so that their people

(49:31):
on the ground and the variousorigins around the world can see
it, and in some respects, we'reable to relay some of that
information to the carrier sothat the carrier can see what to
expect from each shipper.
Of course, protecting the dataprivacy that each of our members
have when using the application, and so producing this dynamic
plan, really helps the carrierto communicate to all their

(49:52):
partners what is expected.
Answering that first question,the second component is what we
call real-time alerts, and sothis is we talked about this
briefly, but whenever somethinggoes off plan whether that's a
booking that should have beenmade on a specific carrier but
was not, or a container thatshould have been gated into a
port but was running late, orvessel that should have arrived

(50:17):
but is now running late anythingthat goes off plan creates an
alert and, like we talked aboutbriefly before, these alerts can
be configured so that aspecific type of alert and a
specific geography gets sent tothe person who is responsible
for addressing those type ofissues.
So it really is a hub where youcan manage all these type of

(50:41):
exceptions and you can triagesystematically who they need to
go to.
And again, producing thosealerts in near real-time allows
people to take action andhopefully get those things back
on track.
And so that really goes back toanswering that question what
went wrong and being able toanswer that question, and as
close to real-time as possible.
The second question, the thirdquestion I should say is what to

(51:04):
do now.
And so that's really wherethese further workflows come in.
This, the broader tool, what wecall our exceptions hub.
When, as a shipper, you can login, you can see all the things
that are going off track.
You can actually configure thatto provide specific steps that
need to be taken in specifictypes of issues.
And again, when these thingsare going off track and being

(51:26):
resolved according to whateverthat workflow might be, we're
capturing all that data in astructured fashion, so it's not
stuck in email or in Excelspreadsheets or whatever it
might be.
So that's the third questionwhat to do now.
And then the final question ishow well it went, and that
really completes the loop,because if you can answer how

(51:47):
well it went, you can actuallyimprove the planning process and
overall, you create this sortof virtuous cycle.
So how do we address thequestion of how well it went?
Well, that's where we provide avery comprehensive set of all
the core insights, or oceananalytics, so all of the data in
the application gets servedback to the member in a set of
scorecards.
All the data can be downloadedin Excel or it can be plugged

(52:07):
directly into the system like aPower BI or a click view and
that's where you can see thingslike the broader patterns, those
histograms we talked about.
You can see not just theaverage transit time but you can
see on average, well, how manyof those shipments are delayed
by one day, or how many aredelayed by three or five days,
et cetera.
So there's a great deal ofgranularity and, once again, all

(52:28):
of those insights canfacilitate not just your
planning process but can alsofacilitate the conversations
that you might be having withyour carrier partner or your 3PL
or your own internal team thatmight be based out of the origin
, making sure that they'refocused on the right issues and
improving all those key metricsand insights.
So those are the four parts ofthe system that answer those

(52:50):
four questions.

Speaker 1 (52:52):
Some of the things you mentioned captures, like
creating and distribution ofdelays.
You know there are shippers outthere that have inventory
systems that would allow them toinput data like that, but

(53:14):
they've never had that data.
So actually using that kind ofinformation could make their
inventory planning, inventorymanagement, more accurate.
I was wondering where the daywould come when we would
actually be able to start doingthat, because it's not been

(53:34):
available for as long as I'vebeen paying attention to it.

Speaker 2 (53:39):
You did right, matt, and that's a huge problem
because, again, like all thisdata is siloed sorry, all this
data is siloed in all thesedifferent systems and now, once
again, by creating this sort oftrusted, shared system of record
where parties can essentiallypull the data together and
create that complete view ofeverything that happened and
extract all these insights andstatistical patterns, et cetera

(54:02):
very powerful.
And once again, all of thisinformation is structured, it's
cleansed, it's harmonized andtherefore it can be plugged
directly into an analytics toolor even, in some cases, into a
working application.
Some of our partners use ourtechnology or the platform as a
microservice within their systemenvironment, so all of these

(54:23):
things are now becoming possible.
But again, it is an earlytechnology and it's exciting to
see, hopefully, how this can beused in new ways once we well,
once people start to plug itinto their applications, plug it
into the existing systems.

Speaker 1 (54:37):
If a shipper adopts this and is new to this and they
say you know, would you help methink through how to best
utilize this?
Do you have a process for doingthat?

Speaker 2 (54:51):
Yes, we do.
We have some case studies whichexplain to the shipper how
other companies like theirs haveused this in the past and what
are some of the benefits thatthey got, and then hopefully
that makes it easier for thatshipper to understand what
benefits they could get fromusing the system.
And for the larger shippers, wehave an enterprise program and
with those enterprise programswe work more closely with the

(55:13):
shipper to help them understandwhat data is available, to
understand from them what datathey might have, how they might
want to push and pull data backand forth between the system.
So for enterprise shippers,there's a large opportunity
there.
So, yeah, we're excited aboutthis and the more we work with
shippers and understand howthey're using the system, the

(55:34):
more it informs our own roadmapso that we can continue to
develop features that are gonnabe relevant for shippers.

Speaker 1 (55:40):
That is so exciting.
Also, I'm wondering.
I mean you had 12 years ofexperience with the largest
ocean container shipper in theworld, merse, do they?
How many carers do you have onboard so far?

Speaker 2 (56:00):
So we have eight of the world's top 10 global
carriers on the application sofar.
That's a pretty good percentage.
Yeah, we're pleased about that,wow, that was great.

Speaker 1 (56:13):
You did a great job, Gordon.

Speaker 2 (56:14):
Thank you Well, you did a great job of leading me
through it.
I felt like I was in safe handsthroughout the entire process.
Good, good.
Okay, well, you have awonderful day you too, and
thanks again, matt, for doingthis, and I really look forward
to our secondary conversationaround inventory calculation.
Yeah, I'm excited to learn fromyou on that.

Speaker 1 (56:30):
That'll be awesome.
Okay, we'll see you later.
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to a five-store review would beimmensely helpful.
We welcome any feedback orquestions related to the podcast
, as well as suggestions forfurther topics and guests.

(56:53):
You can leave your comments onour YouTube channel and rest
assured that I will read eachand every one of them.
Please also take a moment tocheck out our podcast sponsors,
as they play a critical role inkeeping this podcast running.
For more information onspecific topics, time stamps or
links to articles mentionedduring the podcast, head over to

(57:15):
Matt Waller Podcast dot com.