US-based freight forwarder Flexport will open its first two warehouses next month at Los Angeles International Airport and Hong Kong International Airport and more are set to follow.
Having no actual physical freight facilities has led to it being labeled a ‘virtual forwarder’ but global head of airfreight, Neel Jones Shah (pictured below) says it is very much a traditional forwarder, but driven by technology and data.
The former chief cargo officer at Delta Air Lines says: “The idea when we started (in 2013) was to use software and data to market a better product to the shipper. We have also started Customs services. It is all about the user experience for the shipper.
“If you look at the industry as a whole, freight forwarders do not enjoy high customer satisfaction. Shippers are frustrated, as they do not have access to information or know where there shipments are and there are many points in the chain where their shipments ‘go dark’. We are trying to change that. Technology is not everything, but plays a key role.”
“One of the services where shippers get most frustrated is in the last mile like where shipments are in the trucking network and everything goes dark. We have a trucking app, which gives real-time visibility so we know exactly where shipments are, bringing transparency to the supply chain.”
Shah says Flexport works heavily with partners and has formed strong partnerships, which works well. “I am not going to say Flexport is going to have facilities all around the globe, but there will be more.
“We feel we need to have our own facilities and will continue to add them where volumes and business dictates. We will see in 2018 several more locations where warehouse projects are started,” he says.
Flexport’s workforce is growing and it employs more than 400 people. Shah says having employees meeting its particular needs is vital to future growth. “It is not only the software and technology is great, but having the right people is essential to the user experience. It is about having a combination of both,” he says.
As for the forwarding market, Shah says it has been strong since the end of 2016 and yields have been quite high. “Airlines are quite disciplined on the transpacific market – our biggest lane. Business has been quite strong and revenue has been growing ahead of our expectations,” he says.
Shah adds: “It is quite intense at the moment with where the demand and where the capacity is. We anticipate a strong end of the year.”
He believes companies like Flexport may speed up the industry to change: “E-commerce is going to continue to grow and there is room for everybody.” But he warns: “Those that resist change will not make it, but those that want to embrace change will succeed.”