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March 2 2020

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66 The Journal of Commerce | March 2 2020 Logistics Technology: Finding Value in New Solutions Special Report that work for their businesses within their own contract boilerplate and appoint NYSHEX to independently monitor the contract." As Cockrell put it, the two parties can build in "incentives or penalties of their choosing. They can decide at the end of the contract, 'I want $1 or $5 per TEU if the carrier doesn't load,' and vice versa. Or the shipper can say, 'Let's just mutually agree that if you can't accommodate a hundred asks for me this week, I want you to reduce my MQC.' They can build in their own customized performance incentives that we guarantee." Incentivizing reliability Bringing long-term, multi-lane, and port-pair contracts negotiated outside of NYSHEX into the plat- form is a bold step for the exchange. It could prove that the concept behind the platform — that shippers and container lines want a deeper level of contract assurance and a solution to the age-old overbooking and no-show problem — is more important than the two parties actu- ally contracting directly through the exchange. "Those are confidential contracts between a carrier and a shipper that are being negotiated, either bro- kered by NYSHEX or even outside of our knowledge, and the carriers and vice president of sales and market- ing at NYSHEX, told The Journal of Commerce in an interview. "They want it to be figured into the MQC [minimum quantity commitment] that they've negotiated with the carriers. They want their own credit terms that they have with the carri- ers, which is not something that we can float for [shippers with] 30- and 45-day credit terms. So that was a big impediment for a lot of folks. And now, with this new product, we're able to remove those barriers." NYSHEX said shippers and container lines or NVOs can set the "mutual performance incentives contracts with container lines into the exchange, which makes the con- tracts fully enforceable. At its heart, NYSHEX is a tool to eliminate chronic overbooking behav- ior, which creates inefficient use of container line capacity and induces cargo rolls for some shippers. But until now, shippers and sellers of capacity interested in the NYSHEX commit- ment were limited to spot contracts. "The main thing that eastbound [trans-Pacific] shippers have told us was their objection was that they want to use their proprietary boiler- plates that they've worked out with their carriers," Kimberly Cockrell, "Now we're able to scale that reliability for both shippers and carriers in these large annual long-term service contracts."

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