Flexport: Sanne Manders talks profitability, fire-sales and Dave Clark

Flexport remains the forwarder everyone loves to hate – except many of the people that have worked there (and left of their own volition); and customers seem to like its tech and its culture. 

But in this new world of tariffs, uncertainty, and general confusion on the Transpacific – Flexport’s key route – its customer base, including a lot of small shippers, seems particularly vulnerable to the trade war between China and the US. And all while Flexport has pledged a profit this year. 

But its customers are starting to shift lanes.  

“We’ve already diversified quite a bit in the last few years, from the China to US lane,” explained Flexport president Sanne Manders. “China to the US is a smaller part of our business these days.

“When we also look at the awards we won for this year, there is further change in the overall mix.  

“Do we still have exposure to China? Yes, every freight forwarder has exposure to China. Do we have, maybe, a little bit more because we have a large base of SMBs? Yes, that’s absolutely true.” 

But he added: “That said, bigger shippers are the majority of our portfolio, in terms of volume.” 

And this kind of disruption is good for the Customs brokerage, and the trade advisory, as well as its fulfilment business –  Flexport acquired some three million square feet of warehouse space. 

“We have actually quite a bit of access to real estate, simply because we acquired Shopify Logistics just under two years ago. We restructured the business, we took some new leases on, and you always take too much because you’re thinking about growth.  

“We were planning to grow into that space in a year and a half. We actually grew into the space in six months. So the growth expectation for the fulfilment business is that we’re blowing it out of the water.  

“That’s simply because de minimis is no longer valid, and will be abolished for the whole world. So all these smaller ecommerce companies will have to bring their supply chains to the US to reach the consumer. If you have excess real estate – which is normally a drag on your P&L – now it has a competitive advantage, fortunately.” 

And market complexity always helps forwarders. 

Sanne Manders

“There is a need for visibility and insight. So I think it’s leading to a lot more business for us down the road, because our value proposition resonates more when there’s more complexity.” 

Flexport famously, under the (temporary) leadership of ex-Amazonian Dave Clark, boosted its fulfilment business with Shopify’s Delivrr. But then, last month, DHL announced it was expanding its work with Shopify,  a 17% shareholder of Flexport,  while Shopify’s Q1 results reflected no revenue attributable to Flexport. Is the business in trouble? 

“Our role is basically fulfilling orders, and then last-mile to the final consumer. We are not a sole provider for Shopify accounts. Shopify customers have choice of who they want to do business with. But we are only in the fulfilment business on the omnichannel, and we only do the US right now, although we plan to do much more.” 

And the customer base has changed for the better. 

“When we acquired the business, the customer portfolio was very different. We now have a high overlap with the Flexport portfolio, where initially the overlap was almost zero. 

“It was focused on tiny companies. Now we have larger SMB, mid-market businesses that have hundreds of orders a day, versus a few orders a day. So we’ve changed the portfolio to the mid-market, which is, as you know, a segment Shopify also manages. But, honestly speaking, we can’t serve everyone. So Shopify will need other partners as well to make sure it happens.” 

The Shopify deal was Dave Clark’s, and with him now out of the business, was it a strategic mistake? 

“It turns out to be a good purchase. Did I have headaches about it at some point in time? Absolutely. But it turns out there is a tailwind for sure with the tariffs.

“The product quality is really good, and it’s going to be a solid part of our portfolio, because these relationships on the omnichannel side last very long because it’s very hard to change fulfilment partner. So it’s going to bring a lot of stability in our customer portfolio. And customers love it because it’s not only that they now buy fulfilment service from us, they have the integration of other services. 

“There’s all kinds of end-to-end benefits that the customers really like, besides the normal visibility.” 

The fulfilment business makes up about 15% of Flexport’s portfolio, while its Europe lanes are also seeing growth, with “a similar selection of customers” to its US forwarding business.

“There are some customers that do business with us in Europe and in the US, or globally. But it’s about customers who look for the same things. They want inbound visibility, they want control, they want the data in the same place. So it’s a lot of fast-growing consumer goods brands, and digitising larger enterprises – things we’re known for.“ 

So Mr Clark’s parting gift turned out OK – but is Flexport still battling other remnants of his work? 

“We screwed up with Dave Clark. But nobody talks about that anymore. We’ve totally moved on. 

“It’s an episode that is behind us. That’s really good.” 

And finally, what of Flexport’s finances? Firstly, there will be no more funding rounds, promised Mr Manders. “We are not talking funding rounds at all.” 

There had been some speculation that CEO Ryan Petersen’s constant presence on the US TV news was in fact an investor call-to-arms. Is it difficult for the company to be constantly in the media spotlight?

“If you’re creating noise, then you have to face some headwinds,” admitted Mr Manders. 

But becoming profitable is Flexport’s next quest, rather than soaking up more investment funds while diluting shareholdings. Its profitability did hit a delay last year – but, says Mr Manders, it’s back on track. 

“Our internal plan is a little bit more aggressive than end-of-the-year. And we are on track. But, you know, a tweet [from the US president] can change the conversation a little bit – you had a plan, but now the plan has changed. Overall, we are on track.” 

Of course, with no new funding and potential break-even results, there is little liquidity for inorganic growth – although it did manage to acquire Convoy’s tech when it went out of business. Any other plans for acquisitions? 

“I would never say never. But it’s not on the map at the moment. It needs to be the right deal. If we can align on the value, then there’s a conversation. I don’t think that’s very often the case. 

“I like fire sales. So anyone who has a fire sale can always come and approach me…”