Air freight must change: it's not ready to meet the growing demands of e-commerce
The air freight industry needs to change dramatically as it undergoes a “paradigm shift” from the demands of ...
Flexport, the digital forwarder everyone loves to hate, has extended its air network to include Chicago.
The forwarder has dedicated air capacity with Western Global Airlines, which operates a Hong Kong-Los Angeles service, but last month it added an operation between Hong Kong and Chicago.
Despite a blog emphasising speed of delivery and up to 25% reduced delivery times from Asia Pacific to the US east coast, the service will only operate once a week.
However, explained Neel Jones Shah, head of air freight for Flexport, the Saturday night service is “highly efficient”.
“We are bringing cargo out of the airport in 90 minutes after we break it down overnight, and it’s set for delivery for Monday morning.
He added that because the cargo is handled quickly at the destination, it allows the forwarder a little more time to consolidate at origin.
“Volumes to Chicago are heavily skewed towards the end of the week,” he said. ”It’s an important lane segment.”
The HK-LAX service operates on Day 1 and 4, while HK-ORD operates on Day 6.
Flexport said in its blog that the operation, called a “private air service”, would allow “smaller brands a shot at competing with large incumbents, while improving customer relations through quicker delivery times”.
When asked to explain why it would benefit small customers in particular, Mr Jones Shah said: “We don’t treat smaller customers poorly, as some of our competitors do. We treat them the same as everyone else. It’s a good opportunity for them to access capacity on a consistent basis. We have 30 customers per flight, not three or four.”
Flexport will be expanding its network within the next two months, he added.
The network has been in operation for nearly a year, and Mr Jones Shah said he was seeing more contracted space this year than last year.
“Customers are opting for quarterly contracts so they can get a feel for the market this year. We sometimes have contracts, sometimes we sell on the spot market. You can win or lose. Overall, though, we don’t say that every flight has to be profitable. We make more heading into the peaks, less in the valleys.
“The overall aim is to provide a consistent and reliable service to our customers. The first thing is to be reliable. We don’t cancel flights, that can give you a bad reputation in the market.”
The service did stop “for 10 to 12 days” over Chinese New Year, but Mr Jones Shah said customers were informed well in advance.
The new Chicago route also affirms Flexport’s investment in the city, he added. The company has expanded its sales and operations team there to support the air service, and said it expected to hire another 50 employees by the year end.
And Flexport is adding product and engineering teams to its Chicago office, the first base outside of San Francisco to have a technology and engineering presence. It is officially opening its Chicago gateway on April 1.
This week it was reported that Flexport is in talks to raise some $500m in a deal led by SoftBank Group. One source cited suggested Flexport could be valued at some $3bn. Flexport has raised nearly $305m in funding over five rounds. One source told The Loadstar Flexport was also in talks to raise another $500m, on top of the Softbank deal, but this could not be confirmed.