Flexport Business Model

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

Table of Contents

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:

Per shipment insurance – where customers can choose which shipments to protect with options such as retail value coverage.
Annual insurance – annual policies provide end-to-end cargo insurance and are the most cost-effective option for multiple shipments.
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.

Distribution Strategy:

Digital Platform: Flexport primarily operates through its digital platform, which serves as a centralized hub for buyers, sellers, and logistics providers to connect and manage shipments. This platform enables real-time tracking, coordination, and communication, streamlining the global shipping process.
Global Reach: Flexport’s distribution strategy involves serving clients globally. The company facilitates shipments across various modes of transportation, including ocean, air, and land, and covers a wide range of geographical regions to meet the needs of businesses engaged in international trade.
Warehousing: Flexport offers warehousing services, utilizing both its facilities and third-party facilities. This allows the company to provide storage solutions for goods as part of its distribution strategy.
Streamlined Coordination: The core of Flexport’s distribution strategy is to replace traditional coordination methods, such as phone calls and spreadsheets, with its software-driven platform. This enables transparent analytics, communication, and real-time tracking, reducing the need for intermediaries and improving coordination.

Marketing Strategy:

Value Proposition: Flexport’s marketing strategy centers around its value proposition. The company emphasizes the simplification of global shipping and the creation of a connected ecosystem where buyers, sellers, and logistics providers can efficiently manage shipments. This value proposition is communicated through various marketing channels.
Technology and Innovation: Flexport positions itself as a technology-driven solution to the complexities of global trade. The company’s marketing highlights its software platform as a superior alternative to traditional methods, emphasizing efficiency, speed, and transparency.
Cost Efficiency: The marketing strategy also focuses on cost efficiency. Flexport communicates its ability to help clients reduce freight charges through fee comparisons and negotiation, appealing to businesses looking to optimize their shipping costs.
Speed and Transparency: Flexport markets its ability to provide rapid custom quotes in less than 24 hours, emphasizing the speed and transparency of its services. This aligns with the needs of businesses seeking quick and reliable logistics solutions.
Complexity Management: The marketing messaging acknowledges the complexities of international trade and positions Flexport as a company that simplifies these complexities. This is particularly appealing to clients dealing with intricate logistics.

Organizational Structure:

Leadership: Ryan Petersen, the founder of Flexport, plays a central role in the company’s leadership. His vision and expertise in logistics guide the strategic direction of the organization.
Management Team: Flexport has a dedicated management team responsible for various aspects of the business, including technology development, operations, finance, and customer relations.
Technology and Software Development: A specialized team focuses on the development and maintenance of the digital platform, ensuring that it remains cutting-edge and user-friendly.
Operations: Teams are responsible for the day-to-day operations, including coordinating shipments, managing warehousing, and overseeing customs brokerage.
Customer Relations: Flexport places importance on customer relations, with teams dedicated to providing support and assistance to clients throughout the shipping process.
Global Expansion: Teams are tasked with market research, compliance, and logistics to facilitate the company’s global expansion efforts.
Innovation: Given Flexport’s emphasis on technology and innovation, there are teams dedicated to research and development to continually enhance the platform and services.
Financial Services: The company’s trade finance arm, Flexport Capital, is supported by teams responsible for providing working capital loans and managing financial transactions.

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.

Key Highlights

Business Model and Founding: Flexport, founded in 2013 by Ryan Petersen, is a tech-driven freight forwarder specializing in transportation and storage services for businesses. Petersen’s vision was to simplify the complex process of global shipping, which often involved numerous companies and systems.
Tech-Based Platform: Flexport’s platform serves as a central hub for connecting buyers, sellers, and logistics providers. It enables real-time management of shipments through transparent analytics and tracking, eliminating the need for outdated coordination methods like telephone, fax, and spreadsheets.
Focus on Heavy Items: Flexport primarily focuses on shipping heavy items weighing over 150 kilograms. Its services extend to various modes of transportation, including ocean, air, and land, with a particular emphasis on the efficiency of shipping heavy goods.
Ancillary Services: Beyond transportation, Flexport offers a range of additional services such as shipping insurance, quality assurance, storage, fulfillment, customs brokerage, trade financing, and product acquisition. These services enhance the overall shipping experience and cater to various client needs.
Value Propositions:
- Integrated Global Trade Network: Flexport aims to unite the fragmented global trade network into a single, connected ecosystem, simplifying international shipping.
- Software Solution: The platform replaces traditional communication methods with advanced software, enhancing coordination and efficiency.
- Cost Efficiency: Flexport assists in reducing freight charges through fee comparison and negotiation, optimizing cost savings.
- Speed and Transparency: Flexport’s goal is to provide rapid custom quotes in under 24 hours, enhancing speed and transparency in the shipping process.
- Complexity Management: The platform’s software addresses the complexities of international trade, aiding clients in managing intricate logistics.
Revenue Model:
- Shipment Services: The bulk of Flexport’s revenue comes from providing shipment services, including ocean, air, and land transportation. Warehousing services are also offered.
- Customs Brokerage: Flexport offers customs handling and charges import customs fees, assisting clients in navigating complex customs processes.
- Insurance: The company provides various insurance options to protect shipments during transit or storage. These options include per shipment insurance, annual insurance policies, and inspection reimbursement.
- Trade Finance: Through Flexport Capital, customers can access working capital loans to cover supply chain costs. Flexport generates revenue by collecting interest on these loans.
Flexport’s Role: Flexport plays a pivotal role in streamlining global trade by leveraging technology to enhance communication, reduce complexities, and optimize logistics. Its suite of services caters to businesses seeking efficient, transparent, and cost-effective solutions for their shipping needs.

Element	Description
Value Proposition	Flexport offers a compelling value proposition for its customers, including: – End-to-End Visibility: Providing real-time visibility and control over global supply chains. – Simplified Logistics: Streamlining complex logistics processes for efficiency. – Data-Driven Insights: Offering data analytics and insights for informed supply chain decisions. – Global Network: Leveraging a global network of partners and services. – Transparency: Demonstrating transparency in pricing, routes, and operations. – Compliance and Risk Management: Ensuring compliance and risk mitigation in international trade. – Technology Integration: Incorporating technology for seamless logistics management. – Customer Support: Delivering personalized support for clients’ unique needs.
Core Products/Services	Flexport’s core products and services encompass: – Freight Forwarding: Managing the movement of goods via air, ocean, and trucking. – Customs Brokerage: Providing customs clearance and compliance services. – Supply Chain Software: Offering software for supply chain visibility and management. – Data Analytics: Providing data-driven insights and reporting tools. – Warehousing and Distribution: Offering warehousing and distribution solutions. – Cargo Insurance: Providing insurance coverage for cargo shipments. – Trade Financing: Assisting with trade finance and payment solutions. – Customer Support: Offering personalized support through a dedicated team.
Customer Segments	Flexport serves a diverse range of customer segments, including: – Importers and Exporters: Assisting businesses involved in global trade. – Manufacturers: Providing supply chain solutions for manufacturers. – Retailers and E-commerce: Supporting retail and e-commerce businesses with international logistics. – Freight Forwarders: Partnering with other freight forwarding companies for collaboration. – Customs Brokers: Collaborating with customs brokerage firms for compliance. – Logistics Managers: Assisting logistics professionals in managing global supply chains. – Global Reach: Extending services to clients with international shipping needs. – Startups and SMBs: Catering to smaller businesses entering the global market.
Revenue Streams	Flexport generates revenue through various revenue streams: – Freight and Logistics Fees: Earnings from fees associated with freight forwarding and logistics services. – Customs Brokerage Fees: Income from customs clearance and compliance services. – Software Licensing: Revenue from licensing its supply chain software to clients. – Data Analytics Services: Earnings from data analytics and reporting services. – Warehousing and Distribution Fees: Income from warehousing and distribution solutions. – Cargo Insurance Premiums: Revenue from providing insurance coverage for cargo shipments. – Trade Financing Fees: Earnings from trade finance and payment services. – Global Expansion: Potential revenue growth through expansion into new markets and regions.
Distribution Strategy	Flexport employs a strategic distribution strategy to reach customers: – Digital Platform: Utilizing a digital platform for clients to access services and insights. – Global Network: Leveraging a global network of partners and carriers for worldwide coverage. – Customer Engagement: Building customer engagement through personalized support and expertise. – Technology Integration: Incorporating technology for real-time tracking and management. – Marketing and Promotion: Promoting services through marketing campaigns and digital channels. – Supply Chain Visibility: Emphasizing end-to-end visibility and transparency. – Global Reach: Expanding services to clients with international shipping needs. – Research and Development: Investing in technology and software development for innovation.

Read More: