There are many eyes on Flexport: in fact, there always have been, but with new executives, a corporate restructure and exposure to a dampening retail market and soft transpacific trade, rivals are watching with interest – and possibly optimism.
The ‘digital’ forwarder has famously brought in Dave Clark, Amazon’s former consumer CEO, who helped the e-commerce company build its network of warehousing and logistics capacity (something Flexport, an asset-light forwarder, is unlikely to want to do).
He is currently co-CEO with Ryan Petersen, but takes over fully in March. But he’s not the only Amazon employee arriving. Since Mr Clark joined two months ago, former Amazon executives Darcie Henry (HR), Parisa Sadrzadeh, delivery service partner programme head, and Kelly Cheeseman, now chief of staff have joined.
And Flexport is still recruiting. It is looking for a head of ocean and a head of air freight, Americas, and has other executive positions and some 400 engineer roles, to double its technical team by next year.
The executive moves come as Flexport restructures. This month it announced it was launching a new business group, Flexport Ocean & Air, to be led by COO Sanne Manders. Mr Clark said at the time: “As we look ahead to a new phase of growth for Flexport, his track record and deep knowledge of the freight industry will help strengthen our partnerships.”
Rivals say Flexport is losing freight experience and turning the company into a “showy tech hub”, while insiders say the changes will accelerate growth.
“Everyone reports to Dave [Clark] now,” said Neel Jones Shah, EVP and global head of air freight. “Everything has changed. Dave is building a team, reorganising. There is a single-threaded leadership for products, which will accelerate our go-to-market.
“We have spent a lot of time building the team for operations, and a lot of people are coming in from Amazon with deep experience. They scaled the business at Amazon and we are now in a massive scaling phase. It will create a lot of opportunities.”
He admitted “there was a lot to do in terms of quality. We weren’t the best, but now we are on the path to getting it right. We have a product strategy which will go to the market shortly”, and added: “I am very excited about what the next couple of years holds for us.”
Forwarders know that change can often bring about customer loss, an internal focus can lead to external lack-of-focus and rivals are hoping to pick up business. But there is also concern over Flexport’s exposure to the retail market, where it made its name. One customer, UK furniture retailer Made, recently went into administration over supply chain issues.
“Our verticals are focused on retail and consumer electronics, but we are getting into many more sectors, such as automotive,” explained Mr Jones Shah.
“We are being methodical about this, and going slowly to get it right. We are moving into new verticals, but won’t bite off more than we can chew.”
He denied Flexport would struggle in the poor consumer market, explaining: “We are no more exposed than anyone else. Some customers are shipping less, the same as every forwarder.
“We are a hyper-growth entity. Yes, we are concerned about economic headwinds, everyone is, and lots of signals are flashing red, but we are optimistic and acquiring customers. Our net new customers far exceeds any drop off. But we can’t control our customers’ business.”
Flexport is also heavily exposed to the transpacific – in the top five for air and ocean, it claims – where the market has softened.
Mr Jones Shah said: “One of our focuses is to get better tradelane diversity.” It has been expanding in South-east Asia, “following our customers”, to Singapore and India.
“Several OEMs are moving to India and we have a growing presence there. And we are thinking about north Asia as well.
“We are definitely seeing customers looking to diversify and de-risk their supply chains. Ultra long-haul supply chains can be quite risky, and lots of customers are looking elsewhere, to Europe and Mexico, where certain verticals are easier than others.”
He said he expected to see more Atlantic trade next year, and Flexport has been beefing up its European team, opening in Spain and Italy – “we are now really embedded in the right markets”.
“We are hopeful of growth there, and on the Far East Westbound.”
It has always been Flexport’s aim to facilitate trade, he said, and the influence of Amazon executives will no doubt boost that.
“Our mission is to make global trade easier for everyone. Small shippers deserve to manage global supply chains like anyone else, but you need to automate that process. Those customers are key for our future.”
But, Mr Jones Shah acknowledged: “Everyone is making investments to get more digital. If you fail to innovate, you will fall behind. Our competition will invest and catch up.”
The question is, however, with Flexport’s army of tech engineers coming in, whether the market will catch up any time soon. And, of course, whether Flexport can continue to afford such luxuries.