Flexport handles transporting shipping containers in different parts of the world. Even though the transport and logistics business appear unexciting to the tech companies and entrepreneurs, it is a huge, trillion-dollar industry. The industry suffers from outdated tools and manual, time-and-resource-intensive processes. Flexport decided to digitize much of its paperwork and managed to spruce up its transport and shipping processes. The digitization enabled the company to raise $65 million at a $365 million valuation just a year before they closed an even bigger amount of funding.
Digital Rise of Flexport
Flexport’s co-founder Ryan Peterson is referred to as “a machine” according to a report from TechCrunch. He has also become a favorite among investors. Before establishing Flexport, Petersen was the co-founder of Import Genius, which used to scan and sell shipping manifest data about different imports. Venturing into this side of shipping showed him how outdated freight forwarding had become. This led to Flexport’s birth in 2013.
Flexport was receiving funding offers valuing it in excess of $1 billion prior. The company, however, decided to turn down these offers for a more manageable amount. The latest round of series C funding was for $110 million, with a pre-money valuation of $800 million.
The company has also been expanding in terms of manpower. Being a smaller company lends Flexport agility and flexibility to quickly adapt to new technology. Its much-bigger competitors, industry leaders such as DHL and FedEx, cannot adapt as fast to the latest technologies. Consequently, Flexport intends to give these biggies a serious competition.
Heading Towards Bigger Shipments
The company has more than 400 employees across seven offices. Petersen said he is looking forward to $500 million revenue this year. The company now earns around 15 percent of the average $2,000 spent when transporting a shipping container globally. But even Petersen considers his costs and expected values as that of an underdog. He’s still competing with 25 freight forwarders each with over $1 billion annual revenues.
Catching up with competitors, however, doesn’t put Flexport behind them. Its advantage lies in having all the data available and analyzing it for shipping optimization. This approach also simplifies matters that deals with ports, truck drivers, and other individuals who deal with the shipment as it goes through each location. Flexport’s digitization allows containers to go around efficiently. The company has also been using cross docks or warehouses that act as temporary storage for their clients’ goods. Hong Kong and LA house these cross docks. The docks house these items before the goods are delivered with other shipments headed to the same location. Petersen hopes to expand the docks to other parts of the world.
Flexport proves that a business need not start from a shiny and sexy idea. Sometimes all an entrepreneur has to look at are the old methods and how technology can transform those methods into new, efficient processes.