Over ten years ago, two entrepreneurs went knocking on doors in Silicon Valley, looking for investors to fund their logistics start-up. Their pitch? To make global logistics more efficient with software optimisation.
That pair were Ryan Petersen and Sanne Manders, and their idea was to become Flexport,
one of the first ever solutions for digitising freight forwarding, in order to create more visibility and control for shippers.
Today, Flexport facilitates end-to-end communication between shipping stakeholders, and allows cargo owners to track shipments in real time. It employs 2,800 employees across 89 countries.
Pre-Flexport, Petersen was an importer of Chinese motorbikes and was frustrated by the arcane logistics processes he faced.
Speaking to McKinsey, Flexport President Sanne Manders recalls that a typical response when they were seeking investment was that “we don’t need the internet in this industry”.
Back then, Manders was a logistics consultant, and was helping former Columbia Business School graduate Petersen.
But the pair succeeded in bankrolling their venture, and today the company is the sixth-largest digital freight forwarder in the trans-pacific region. In 2022, the company earned $3.3 billion in revenues.
Manders says the secret for Flexport’s success is that the company is “customer obsessed”.
Crucially, he points out, Flexport defines its customer as including those “beyond people who pay for our services”.
“We look at our employees as customers, as well as our asset owners and partners,” he says. “My mantra is, if you make clients, partners and employees happy you will only make money.”
Manders adds that another plank of the company’s success has been the realisation that in logistics “you can create a lot of value through better user experiences and by reducing inefficiencies”.
The world has changed a lot since Flexport was founded, notes Manders – not least the power of technology.
“You need real-time visibility to observe, and that’s the data,” he says. “Although a lot of companies claim they’ve solved this, that’s not the case.” Visibility, he says, “is a hard nut to crack, especially in markets where nothing runs on schedule”.
Manders says this is why Flexport channels a lot of its engineering resources into this, and that its long-term goal “is to make visibility so easy you don’t even think about it”.
As well as the emergence of data-driven digital solutions, Manders says supply chains are far more complex than they were a decade ago.
“Supply chains used to be relatively simple,” he says. “You might have had a factory in Guangzhou and a warehouse in Ontario, next to the port. You imported a thousand containers a year and had direct contracts with the steamship line, a customs broker, and a drayage provider. Everything could be easily managed on a spreadsheet.”
Today, he says, it’s a very different story.
“On the supply side, you’re sourcing from ten locations in the world, and there are trade conflicts and tariffs,” he says, adding: “On the demand side, where your customers sit, complexity has also increased dramatically.
“While you used to store all your goods in one location, now you need to have nine locations to accomplish fast, two-day deliveries to your e-commerce customers.”
This is why, says Mandersa, expectations are shifting towards one-day deliveries, which might require 40 locations to execute.
“If it’s same-day deliveries you’ll need 200 locations,” he says. “In other words, in the past you were looking at one straight line with a permutation of one and now, with ten points of origin and nine or more destinations you’re looking at 90 combinations. That’s not manageable on a spreadsheet, and you need technology to keep a lid on that.”
In terms of what is next for Flexport, Manders says: “Keeping up the growth, through better user experience and trade lane diversification, remains super important for us.
“The largest forwarder in the world has something like a 3% or 4% market share. Globally, we have a 0.3% market share, which means I can increase this share by 300 times before I’m done.”
