Ocean shipping is one of the most critical aspects of the supply chain for most industries. It’s estimated that 80% of goods are transported by ships. The pandemic tested the resiliency of our supply chains, bringing an unprecedented shift to the digitization of many of the moving parts within the logistics arena. NYSHEX is a digital platform that centralizes the activities of shippers, carriers, and Non-Vessel Operating Common Carriers (organizations that buy and sell container space without owning vessels) offering a single source of truth. The platform is adaptable to support the various phases of shipments for all these varying entities while handling shipping documentation and soon payments in an elegant solution that creates transparency. Built by experts in the space, the platform focuses on streamlining the needs of all involved parties, which has fostered universal adoption without compromising functionality. Nearly 200 shippers, like PVH and Staples, rely on NYSHEX to handle their ocean contracts along with 130 NVOs and 7 large carriers like Maersk and Hapag-Lloyd.
AlleyWatch caught up with NYSHEX SVP Matt Marshall to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $68.9M, and much, much more…
Who were your investors and how much did you raise?
NYSHEX raised a Series B, with $25M of new equity capital. Collate Capital led the round, with participation from Blumberg Capital, Goldman Sachs, and New Road Capital.
Tell us about the product or service that NYSHEX offers.
NYSHEX has built an integrated technology platform for Ocean Carriers, Shippers, and Non-Vessel Operating Common Carriers (NVOCCs) that provides performance reporting and exception management tools for all types of commercial Ocean freight contracts. Additionally, our technology is fully configurable and will support any type of commercial terms within the contract. For example, NYSHEX technology has been configured to support the QFP contracts that Hapag-Lloyd developed, and we’re piloting similar programs with other carriers, shippers and NVOCCs. Additionally, we launched a Shipper-focused Allocation Management product in August that can address the problems of 100,000+ shippers.
What inspired the start of NYSHEX?
NYSHEX was founded because its founders experienced firsthand the challenges associated with keeping track of contractual commitments and realized these challenges could not be solved by the incumbents. The solution needed to be independent to create trust and avoid bias, and it needed to be available to all players in the market as opposed to a tool that only one carrier creates and other carriers would reject.
How is NYSHEX different?
We have developed what we believe to be the industry’s first AI solution to match freight bookings and physical container movements all the way from the shipper through the freight forwarder to the ocean carrier. The integrated nature of the platform is focused on adding value to all parties rather than a technology that optimizes for just one or two of the participants. We are essentially building industry infrastructure that does not currently exist.
C-suite decision-makers recognize the need for a shared system of record for freight contract performance, coupled with workflows that improve performance as well as reduce cost (by creating efficiency). IT department heads should recognize this is difficult to build in-house because of both the complexity and also the need to integrate with so many different data sources.
Our mission is to make ocean freight more reliable through trust, data, and workflows.
What market does NYSHEX target and how big is it?
The global ocean freight market is a $400B per year business. However, the ocean freight industry lacks the basic digital infrastructure that should already exist. For example, unlike many other mature markets, there aren’t any standard form contracts, there is no financial services network for shipping contracts that holds deposits and settles payments. The industry is basically playing catch up after having spent roughly the last 10 years focused on surviving a price war and dealing with rapid consolidation. Now is the time all this digital infrastructure needs to be developed in order for the industry to fully benefit from modern technology.
What’s your business model?
NYSHEX builds SaaS technology solutions for Carriers, Shippers, and NVOCCs and charges for those solutions on an annual or multi-year contractual basis.
How are you preparing for a potential economic slowdown??
The Pandemic highlighted to the market the need for our products and has fundamentally changed industry dynamics moving forward. Unlike the post-pandemic hangover in e-commerce, our growth is expected to continue because volatility is expected to continue; essentially, our business is counter-cyclical to the downturn. Supply chains have changed for the long run and new market opportunities have emerged as a result.
What was the funding process like?
Overall, we feel really good about where we landed given the changes in market dynamics earlier this year. We had more interest than the $25 million round we were looking to raise. We were surprised by how much more the investor community were interested in ocean tech compared to previous years, highlighting the importance of the problem that we are solving and our market opportunity.
What are the biggest challenges that you faced while raising capital?
The biggest challenge that we faced was the overall timing of the fundraise. Investors who were just starting to get into supply chain tech were less likely to engage than the ones who understood freight. Thankfully, the investor community overall has become more interested in supply chain tech and we expect the trend to continue.
The biggest challenge that we faced was the overall timing of the fundraise. Investors who were just starting to get into supply chain tech were less likely to engage than the ones who understood freight. Thankfully, the investor community overall has become more interested in supply chain tech and we expect the trend to continue.
What factors about your business led your investors to write the check?
We had an amazing group of investors that participated in this round and they have a deep understanding of our industry and the value that we create for our customers. Additionally, they had a great understanding of the size of the opportunity in front of us and how we are the platform-play in the ocean market.
What are the milestones you plan to achieve in the next six months?
We expect to close more Hapag Lloyd-like partnerships with carriers and NVOCCs over the next several months. To put our growth in perspective, we did $1 billion worth of freight in 2021 and are on track to do $4 billion this year. We expect that trend to continue. Our business is growing extremely quickly due to the tremendous interest of Carriers, Shippers, and NVOCCs.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
With the current market conditions, now is the time to focus on the core fundamentals of the business and driving towards phenomenal product-market fit. Once you have product-market fit, you can get more aggressive with commercial activities, but until then, it’s a good idea to remain conservative on where you spend.
Where do you see the company going now over the near term?
Our focus at this point is to continue to invest and scale our core software solutions for Carriers, Shippers, and NVOCCs while also investing in an upcoming release of a Payments offering with strategic finance partners.
What’s your favorite restaurant in the city?
Favorite restaurant in NYC is a hard one to answer, but last week we had a great meal with some of our best customers at ABC Cocina.
