Freight is a trillion dollar industry, and it hasn’t evolved at the pace of the 21st century, having long relied on ledgers, email, and (even) phone calls to communicate. But there is a new breed of startups using technology to tackle the biggest problems in a complex global supply chain, ten of which made the 2022 CNBC Disruptor 50 list.
One of these, Flexport, not only topped this year’s CNBC Disruptor 50 list, but also believes it’s poised to compete with the world’s largest logistics company: Amazon. That’s what founder and CEO Ryan Petersen says, although he’s not boasting about it.
“We could become one of the largest companies in the world if we fulfill our potential,” Petersen said in an interview on CNBC’s TechCheck on Tuesday. “But there is a lot to do,” he added.
“Amazon is the best logistics company in the world, and I say that humbly because I want Flexport to be the best logistics company in the world,” said Petersen. “But we didn’t really deserve that, and I really look up to Amazon and try to learn as much as I can from the way they work,” he said. “There is still so much hustle and bustle in this company.”
Petersen founded Flexport in 2013 because he believed there had to be a better way to manage the flow of goods being loaded onto cargo ships, planes, trucks and trains and transported around the world. The company’s trucking and brokerage services reside in the cloud, enabling cost, container efficiency and greenhouse gas emissions to be analyzed quickly and more accurately than traditional systems.
Over the past year, as the supply chain crisis lingered, Flexport had its own bottleneck: a waiting list. “We couldn’t take any more customers. We couldn’t even serve all the customers we had,” he said.
The waiting list was cleared and sales growth was significant. In 2019, before the pandemic, Flexport had sales of $650 million. Over $3 billion in revenue last year. It’s on track to $5 billion this year, according to Petersen.
“We’re still a tiny sliver,” he said. “We believe we represent less than 1% or 2% of global container shipping and that doesn’t count in all of our other businesses – air freight, customs, cargo insurance, we have a trade finance group that does inventory finance.”
Flexport investor David George, general partner at Andreessen Horowitz, told CNBC, “It’s a huge, huge space with very, very little technology.”
The company has more than 10,000 customers and suppliers in 112 countries and reported its first positive EBIT year in 2021 alongside revenue growth.
In February, the company announced a $900 million Series E funding round at a valuation of $8 billion, which included investors such as Andreesen Horowitz, Shopify, and Softbank.
As uncertainty remains in the supply chain, Petersen is reluctant to make any predictions but says the company sees disruptions in demand.
“We’re definitely seeing a slowdown in consumer demand, demand destruction as they say,” Petersen said. “We see that the warehouses are starting to fill up and a lot of our cargo is coming out of the ports. The warehouses don’t have space to house them, so it’s a pretty ugly situation out there, especially for direct-to-consumer brands that are newer and hotter and don’t have a really long track record of predicting demand.”
The situation in China, at least at the ports, may not be as bad as some assume. “The ports in Shanghai are actually running smoothly,” said Petersen. “It’s more like factories are slowing down a bit. The first signs that it’s starting to open up again, in companies moving back towards production, it’s a little too early to tell exactly what that bubble will look like, the bubble inside sense of all these orders that abandoned while moving through the systems to get down. We’ll know in a few weeks.
Amid market volatility and other inflationary pressures over the past year, Petersen also said he faced internal pressures to list the company, which he resisted.
“I thought the market was kind of overheated,” he said. “I mean there’s always people who would like to see that to celebrate that, but we’ve decided it’s better to stay private and still put some money on the balance sheet given the craziness of the markets, and we are very, very happy that we did it.”
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https://www.cnbc.com/2022/05/17/we-can-be-one-of-worlds-biggest-companies-amazon-freight-rival-says.html We can be one of the biggest companies in the world, says Amazon’s freight rival