YC-funded freight forwarding company. Basic thesis is by using tech, you can dramatically lower the labor costs of forwarding, and since freight forwarding has huge returns to scale, the benefits compound. They raised 2 G$ from 2019-2022, and their CEO used that warchest to expand counter-cyclically through the pandemic. TBD if either of the two theses pan out.
Freight forwarding itself is the industry of coordinating the logistics of freight shipment, ie subcontracting with physical movers of goods (ocean carriers/railroads/trucking companies) and dealing with customs/legal requirements involved in the movement of goods
(Disclaimer: former FP employee and current shareholder)
> Basic thesis is by using tech, you can dramatically lower the labor costs of forwarding, and since freight forwarding has huge returns to scale, the benefits compound
Is this remotely true though? Aren't the main costs of forwarding simply fuel?
At some point I was importing goods from China (really small volume though) and I did ask them for a quote, and they were twice the price what the Chinese factory could get me from their own forwarder.
Not who you responded to, but I've listened to a number of interviews from the former CEO (highly recommend the Odd Lots podcast for his interviews and many other supply chain related conversations). A couple concepts, some details may be a bit off and I'm very open to correction.
There is a lot of administrative cost. IIRC, you might have something like 1 dispatcher for every 50 drivers. You have other people giving quotes via phone, decently high turnover for truck drivers, slow loading warehouses that cause a cascading effect when the driver can't complete all the stops planned for the day, and a strict limit on hours worked for truckers.
Some of the pandemic port congestion was truckers arriving at a port to pick up a particular load, but that load wasn't ready right then. Flexport has an app which basically let drivers on their platform arrive at a port, grab any container that's part of their platform, and take that to the destination. This prevented countless hours of idle trucks in ports.
There was an article I think on HN a couple of days ago, wondering why Uber and Lyft still couldn't turn a profit after all these years, while cab companies are still around and thriving, and wondering where all the money went.
Isn't it possible that tech simply overpromised, and that a couple of guys here and there smoking, typing numbers in spreadsheets on old computers, yelling over the phone and writing things down on post-it notes are simply cheaper and just as "efficient" as an army of AWS EC2 instances spilling out logs on S3 under the supervision of highly-paid engineers and dev op guys?
If you think about it you still need the same amount of drivers but a lot more administrative staff in the form of a world class engineering team. How could it be cheaper?
My roommate worked at a freight forwarder, but from what he told me, the entire thing is a mess of excel spreadsheets and highly inefficient.
I think the pitch of flexport is what if we modernize the technology and make it more efficient by reducing or removing the need of all of these people managing the forwarding via excel.
I think part of the problem with that pitch is that the cost of an IT integration in this industry could pay for a lot of people in Asia to manage a forwarding operation in Excel. Ocean carriers don't have like, APIs. It's all custom integrations with EDI, SOAP, or CSV-over-FTP and you have to have a lot of tedious meetings with them to figure out how to map out and interpret the data they can send and receive.
Yeah they also don't really have an incentive to integrate with flexport because even though it is a PITA you really only have a few options to ship freight across the ocean.
If you asked me whether I've seen more net inefficiency in my life resulting from underengineering with Excel-like workflows vs. overengineering through the "best" software engineering practices at a given time I really don't know if I could say.
Freight forwarders merely subcontract to the underlying carriers, who, theoretically, are pretty commoditized. In this model, the differentiating costs for a freight forwarder is in the labor required to organize the various subcontracts, which is what Flexport attempts to drive down via tech.
That said, I can't really vouch for the soundness of this argument one way or another. It's been a long time since I worked there, and my primary interest when I did was more in understanding the industry at a conceptual level than in litigating the viability of the business model.
Yes, a freight forwarder is sort of like a travel agent for freight--it's a middleperson role, in contrast to carriers, which are "asset-based" and operate vessels/planes/trucks.
Another significant cost factor for a freight forwarder is IT integrations with customers and carriers--many of which are very old-school and use EDI, SOAP, or even CSV-over-FTP to communicate shipment instructions and statuses.
I'm not sure to what extent Flexport implements these kinds of integrations with their partners, but there is definitely a significant hurdle to breaking even on investment in this kind of automation vs. just hiring clerks to process everything manually with e-mails and phone calls, especially in countries with lower labor costs.
And in many places M stands for thousand, from Latin "mille" (as well as the Roman numeral). That doesn't keep people from counting in kilo-, mega- and gigadollars. Still less confusing than dealing with short vs long scale numbers in translation.
I wouldn't immediately parse that abbreviation in the US--but if I did I'd parse it as G being shorthand for grand. More commonly 2Gs would be used for 2x the normal force of gravity--i.e. you weigh twice as much.
Can you imagine the backlash they would get from both inside and outside the company if they started pulling job recs before publicly announcing the downsizing?
Fully agreed, it just shows what people should already know - the only folks who know a layoff is coming in advance are C suite and VPs, maybe a few others. And they will lie through their teeth about it right up until the moment it happens. I'm sure the recruiter who sent that message had no idea this was coming, and is just doing his job.
The rest of us have to read the tea leaves. But for every company that lays people off, you'll find employees swearing up and down that the business is healthy, layoffs aren't happening, and they know this because execs assured them for the third time just yesterday that there's no plans for layoffs.
Don't know the exact origin of the name but maybe an easy way to remember it is "FLEXible transPORT".
To massively oversimplify it for the sake of being short:
- ship a small package within the same country --> UPS/FedEx
- ship a large heavy package (e.g. forklift pallet) within the same country --> freight trucking company
- send a shipping container from one country to another that requires a ton of complicated government paperwork for export & import, pass customs inspection, pay duty fees, and involves coordinating ocean carriers, railroads, air freight, docks, etc --> a freight forwarding logistics service like FlexPort.
E.g. you invented a new electric scooter and had a factory in China manufacture a thousand of them. Now you have to ship those 1000 scooters from the factory to a warehouse in USA. That's the business FlexPort is in. FlexPort itself doesn't own any ships or railroads. It is a coordinator (acts as agent) for various transport companies.
Funny, it's one of these companies that screams "we are hiring!" everywhere but looking at their Linkedin employee growth it's basically flat for more than a year.
This is the guy that got famous during the pandemic for suggesting ports stack containers 3 or 4 levels high vs the standard of 2 [1] [2] Turns out 2 is just fine.
Where did you get the impression that two is fine? I am somewhat familiar with the issue, and looked at both of your links, but still don't understand. Where I live, they stack containers six high.
> Where did you get the impression that two is fine?
That part was a joke because of Flexport's layoffs due to lack of volume. The stacking is probably a separate topic compared to the success of his business, but was just stating why his name and company are familiar on HN.
I personally believe they should stack them vertically vs horizontal stacking to save space so they are always accessible vs 2-3-4 high. (also a joke)
I still don't get the bit where you say 2 high is standard. It's not. Though US port infrastructure is special, it's very outdated/inefficient compared to pretty much the rest of the world.
It's from the article last time this came around [1]
"For instance, Petersen says, local zoning rules prevented the owner of truck yards in Long Beach from storing containers more than two high"
Freight forwarding itself is the industry of coordinating the logistics of freight shipment, ie subcontracting with physical movers of goods (ocean carriers/railroads/trucking companies) and dealing with customs/legal requirements involved in the movement of goods
(Disclaimer: former FP employee and current shareholder)