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Case Study

Dunavant

How NYSHEX has helped this NVOCC
gain a competitive advantage.

The Challenge

Dunavant is a 60+ year-old family-run operation that attained its preeminent role as a leader in global shipping through a history of innovation and bold first-adopter strategies. Take for example their move to shift from their mainstay cotton trading operations to logistics operations in 2009. Their decision to embrace logistics, a totally new field at that point, has paid big dividends. Decades earlier in the 1950s, Dunavant was one of the first to go into “forward contracting” whereby a farmer agrees to a price for a crop before it’s planted. And in 1972, Dunavant participated in the first-ever sale of U.S. cotton to China.

It’s no accident that this company with its gaze fixed firmly on the future was one of the first adopters of NYSHEX, and is one of the exchange’s most ardent supporters. Like all international freight forwarders, Dunavant is challenged by supply chain uncertainty caused by the unreliability of ocean space and equipment availability. Even though they are a sizeable global logistics provider, it can still be hard for them to secure space during peak periods.

A second challenge faced by Dunavant is shared by NVOCCs throughout the industry. Many logistics providers fear that container shipping is becoming commoditized, a move which detracts from the essential role freight forwarders play as providers.

The NYSHEX Solution

Dunavant sees NYSHEX as a creative solution to the reliability issues in container shipping today—as well as a new way to provide value to their customers.

“We’re facing a global shipping market that has fewer carriers now than ever, and the next step for us (NVOCCs) to differentiate ourselves is in the form of more predictable service with more secure vessel space, rate transparency and equipment accountability through the use of a platform such as NYSHEX,” says David Underwood, LCB, Vice President, Global Operations of Dunavant Logistics Group, LLC.

In addition to providing the solution to Dunavant’s space and reliability needs, they believe NYSHEX can help solve major industry issues. “Having a centralized forum where carriers and shippers can communicate in a neutral environment encourages a win-win outcome for both parties and that is the direction that the industry is headed,” Underwood says. 

The concept of enforceability at the heart of NYSHEX is working for Dunavant. There is accountability on the part of the shipper to execute their shipments as booked, along with the pressure for both shipper and carrier to follow their agreements. This allows each party to have a unique stake in the process that was lacking before. 

“If an ocean carrier rolls cargo due to space issues under a NYSHEX contract, we now have some recourse and both sides of the transaction have a financial interest in the success of each shipment,” Underwood explains.

In contrast to some fears among forwarders that NYSHEX commoditizes freight services, Underwood sees just the opposite. NYSHEX provides a new arrow in Dunavant’s powerful quiver of global service offerings—one they believe is right for many clients, and represents the future in freight forwarding.

“For an NVOCC, it’s a matter of finding a client willing to look at this option from a service perspective, and convincing them to use it at the very least as a strategy to hedge against risk within their supply chain,” Underwood says. “I think what they’re (NYSHEX) providing is going to be necessary in the future to help facilitate global trade while still allowing BCOs, freight forwarders and NVOCCs to excel within their fields of expertise.”

Dunavant's Results

NYSHEX is playing an increasing role in Dunavant’s ongoing strategy to find alternatives to traditional ocean contracts for new opportunities and gain more confidence in selling vessel space to clients. The NYSHEX Forward® contract provides them with flexibility that enables them to be more creative in their approach.

They see a definite market for selling their clients a space-guaranteed premium service through the NYSHEX Forward®. According to Underwood, “With both import and export space being tight in recent months, clients are showing more willingness to consider this type of service.”

Dunavant is looking forward to growing with NYSHEX. “As more carriers participate in the NYSHEX model, it would be nice to see more of their trade lane portfolio become available for NVOCCs to secure contractually on the platform. Allowing more access to NVOCCs and their FAK cargo onto this platform could push it to the next level,” Underwood added. “There are viable win-win opportunities out there that would be ideal for a NYSHEX contract such as peak season and pre-Lunar New Year cargo, where the premium ocean freight expense is willingly paid by shippers to get the space support they need.”

NYSHEX
“From our experience, NYSHEX isn’t a platform trying to commoditize the ocean shipping market. There is a value-add being offered by the stake each shareholder has on both sides of the transaction – shipper and carrier, to mutually execute their agreements.”
David Underwood, LCB
Vice President, Global Operations

Takeaways

Top Benefits Realized

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Guaranteed space and equipment
enable shippers and forwarders to
hedge against supply chain risk.

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Mutual agreement makes
contracts enforceable

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The NYSHEX Forward®
provides a new premium service
and way to add value.

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