Flexport Raises $65 Million in Venture Capital to Expand Operations
San Francisco startup Flexport Inc. raised $65 million in venture capital to expand U.S. and global operations, the company announced Sept. 26.
The new funding, which comes from the Founders Fund, Bloomberg Beta and Felicis Ventures, will be added to the $29 million it already had raised. Trae Stephens of the Founders Fund will join the Flexport board of directors.
Flexport hopes to outduel the traditional freight forwarders and upend a global trade system that remains manual and analog, in some ways. Its competitors include Expeditors International of Washington, Ceva Logistics and Kuehne + Nagel Inc., which rank Nos. 5, 9 and 13 respectively on the Transport Topics Top 50 list of the largest logistics companies in North America.
“On the other side of the ocean, [shippers] knew what they put into the container. But between the two shores, it’s a black box. We say that’s ridiculous and customers should know what’s in the box for their inventory,” Flexport Chief Operating Officer Sanne Manders said, adding the traditional systems are inefficient, outdated and don’t provide visibility.
Manders pointed to Hanjin Shipping Co. as an example. The ocean carrier filed for bankruptcy protection Aug. 31, and several vessels have since returned to South Korea with cargo that never made it to the United States.
“So let’s say we have products on a Hanjin vessel and we need them for Wal-Mart. We not only know what container is stuck, but what items are in there,” he said. “So we can go back and look at all the shipments of those items and pull up all your inventory. Then, you can determine your inventory allocation.”
Manders added that Flexport also will use funds to build sorting facilities to unload containers near ports. Other money will be used to hire engineers and expand globally with new offices.
Flexport has offices in New York, San Francisco, Hong Kong and Amsterdam, Netherlands, and soon will open a location in Shenzhen, China.
The company, however, is expanding during a turbulent time in the ocean freight market.
“We expect a moderate growth in containerized ocean trade of around 2 to 3% in the coming years, but a return to the double-digit growth figures of the previous decade is unlikely,” according to Seabury Group, a global advisory covering transportation.
But Manders countered that Flexport isn’t concentrated on the overall market as much as taking business away from the top logistics firms.
“The growth is not important to me because the market is insanely big. The game we are playing is a market share game, not a market growth game," he said.