The New York Shipping Exchange (Nyshex), a platform that connects shippers with ocean carriers, today announced that it raised $25 million in a Series B funding round led by Collate Capital with participation from Blumberg Capital, Goldman Sachs, and NewRoad Capital. The infusion brings the company's total raised to $69 million, which CEO Gordon Downes says will be put toward expanding Nyshex's service to support all types of ocean freight contracts.
Downes makes the case that the ocean shipping industry lacks the basic digital infrastructure that exists in other markets. For example, he says there aren't standard contracts, and there isn't a financial services network that holds deposits and settles payments.
"The industry is playing catch-up after spending the last decade or so focused on surviving a price war and dealing with rapid consolidation," Downes told TechCrunch via email. "Nyshex was formed because [we] experienced firsthand the challenges associated with keeping track of contractual commitments, and [we] realized the incumbents could not solve these challenges."
Downes founded Nyshex in 2014 after serving as director of shipping giant Maersk's supply chain and key accounts team. The idea, he says, was to create a "carrier-neutral" tool that could provide a single source of truth for contract fulfillment and performance.
To this end, Nyshex provides workflows for creating contracts that communicate what shippers need to carriers in terms of space and equipment. The company acts as a neutral third party, enforcing contracts between shippers and carriers and hosting dashboards that present critical metrics to both carriers and shippers. In the event something goes wrong, Nyshex works with shippers and carriers to attempt to arrive at a resolution.
Nyshex can also match freight bookings and physical container movements. Using AI trained on ocean carrier data and info from third-party shipping aggregators, the system can sync shippers and freight forwarders with ocean carriers in real time, Downes says.
"The pandemic highlighted to the market the need for our products and has fundamentally changed industry dynamics moving forward," Downes said. "C-suite decision-makers recognize the need for a trusted system of record, and this has been magnified by the ongoing supply chain disruption. Freight contract performance, coupled with workflows that improve performance -- as well as reduce cost by creating efficiency -- will improve supply chain resilience and create a competitive advantage."
Looking to stay a step ahead of rivals like Freightos, Infor Nexus, and BlueX, Nyshex plans to launch a payments product with undisclosed "strategic financial services partners" in the coming months. Looming larger on the horizon is a new "shipper-focused" allocation management product, which Downes says will be able to support over 100,000 shippers that contract directly with ocean carriers.
Business is steady in the meantime, with annual recurring revenue hitting $12 million this year and operations expected to reach cash-flow positive status in Q3 2022, according to Downes. Nyshex handled $1 billion in gross freight volume last year for around 330 carrier and shipper customers and anticipates upping that amount to $4 billion by the end of 2022.
"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," Downes said. "From a financial standpoint, our Series B could be our last funding round; however, we plan to continue to raise to capture more of the whitespace in making freight more reliable through trust, data, and workflows."
Nyshex has 120 employees and expects to expand to over 170 by the end of 2023.