Flexport Business Model

Flexport is a tech-driven freight forwarder that sells transportation and storage services to other businesses.

Understanding Flexport’s business model

Flexport was founded in 2013 by Ryan Petersen who noted that while the world seemed more connected than ever, it still required up to 20 different companies – each with their own processes and systems – to move a single shipment. 

To streamline this process, Flexport’s tech-based platform empowers buyers, sellers, and logistics providers to connect and manage shipments in real-time with software that offers transparent analytics and tracking.

At the heart of Flexport’s business model is the commodity shipping services it offers with a particular focus on heavy items exceeding 150 kilograms.

The company also offers ancillary services such as shipping insurance, quality assurance, storage, fulfillment, trade financing, customs brokerage, and product acquisition.

How does Flexport provide value?

Flexport provides value in several different ways:

  • To connect the fragmented global trade network into a single, connected ecosystem and offer integrated international shipping.
  • To provide a software solution that replaces old forms of coordination and communication such as telephone, fax, and spreadsheets.
  • To facilitate reduced freight charges through fee comparison and negotiation.
  • Speed of service. Flexport aims to provide rapid custom quotes in less than 24 hours.
  • Software that can better manage the complexity of international trade.

How does Flexport make money?

Flexport’s revenue model consists of shipment services, customs brokerage, insurance, and trade financing. Below is a brief look at each.

Shipment services

Flexport derives most of its revenue from shipping services provided to commercial customers – whether that be via ocean, air, or land.

Warehousing is offered by Flexport’s own facilities or from those offered by third parties.

The company provides a quote for each shipment based on historical data, with fees also applicable for goods that need to be stored long-term.

Flexport’s transparent, up-front fees are then split between the company and any third-party service provider.

Customs brokerage

Flexport also offers customs handling as part of their product suite.

This is often a complex and tedious process depending on the country of importation. In addition to customs handling services, the company also charges import customs fees to the client.

Insurance

Flexport’s digitally-driven insurance product is fast, fluid, and cost-effective. 

Here, the company offers three options:

  1. Per shipment insurance – where customers can choose which shipments to protect with options such as retail value coverage.
  2. Annual insurance – annual policies provide end-to-end cargo insurance and are the most cost-effective option for multiple shipments.
  3. Inspection reimbursement – to protect against unforeseen customs costs that arise from changes in trade law and customs enforcement. At the time of writing, this option has yet to be released.

The total cost of the policy is determined by the total value of the goods to be shipped plus any applicable freight and customs charges.

Trade finance

Flexport Capital is a solution that allows customers to cover their supply chain costs and redirect working capital into growth.

The loan capital is non-dilutive, unsecured, and can be as much as 80% of the Commercial Invoice.

Flexport makes money by collecting interest on the loans which can be used to pay for goods, suppliers, and shipping itself.

Key takeaways:

  • Flexport is a tech-driven freight forwarder that sells transportation and storage services to businesses looking to ship goods globally.
  • Flexport’s software allows buyers, sellers, and logistics providers to connect and manage shipments in real-time with transparent analytics and tracking. Primary value is created by streamlining the fragmented global trade network into a single ecosystem.
  • Flexport makes money via shipment services, trade finance, customs brokerage, and several insurance options to protect the value of goods while in transit or storage.

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