Saturday, November 2, 2019 General

A Conversation With Bill Paul Regarding The Fate Of Flexportpermalink

www.linkedin.com

Bill Paul is the industry veteran, who has been critical of the freight forwarding tech-startup Flexport since their inception. We both had a chance to converse regarding the fate of Flexport as below.

Bill Paul

We know that Logistics technology works. That’s why CH Robinson, DSV, Expeditors, Kuehne + Nagel and pretty much every other Freight Forwarder on the planet has been so successful for decades using it in conjunction with their own global network and talented employees. However, just having technology won’t help the next upstart (yes, I said upstart and meant upstart) achieve global domination regardless of how much money their VC backers are pumping into their marketing and hype.

Imran Jafri

Yes, couldn’t agree more, our industry is tough. Tech alone isn’t going to help you succeed, and you need a lot of talented people with the knowledge of freight and customs too. But VC funding does provide a ‘head start’. If they keep a fair balance between their burn-rate and revenue they can keep the head-start for a very long time, or even becoming the leader in their niche ultimately.

Bill Paul

If you’re referring to Flexport, they aren’t going to become a leader in their niche ever. They’ve already discovered that Freight Forwarding and Customs Brokerage is a low-margin business which is why they cruised Google looking for competitors who might be interested in handling their Customs Brokerage. How long before they get out of Freight Forwarding, too and just become a tech company trying to sell their Operating System to other Forwarders and compete with CargoWise?

Imran Jafri

The only problem I see in your comment is that, it’s extremely ‘speculative’ what you said may and may not be true, and it’s valid for any wild statement that we may make. For instance look at Google, Yahoo refused to buy it for a fraction of the price what they are worth today. And who had guessed it, they would become a nearly trillion dollar company later. And even Paul Krugman had dismissed Internet in the beginning as nothing more than a replacement for a Fax machine. 

So the point I am trying to make, Flexport is the first VC funded startup of its kind, and making a firm statement about their fate, would be too premature. But at least they’ve already established themselves as the leader in the ‘tech-freight’ scene. They may be lagging behind the traditional behemoth freight forwarders, and only time would tell, if they catch up or not. Even by the traditional freight forwarders standards, it’s my educated guess they would be into top 100, if not top 25. Which is still very remarkable in the face of, how competitive and tough our industry is.

Bill Paul

Of course my comment is speculative. It’s an opinion based on historical data and their most recent PR flop when they randomly messaged competitors they found through a Google search to see if they wanted to handle their Customs clearances. If heads don’t roll after that clanger, they never will.

Imran Jafri

I would agree it wasn’t a wise move however calling it a blunder is little too harsh. I haven’t seen the content of that email and even not sure at what staff level it was broadcasted. Nevertheless subcontracting local brokers doesn’t seem to me a bad idea. But definitely an unsolicited bulk email isn’t the right way to do so.