Flexport Silicon Valley Supply Chain Repairer Leads CNBC Disruptor 50

After a year in which supply chain bottlenecks have shattered the global economy, Flexport, which uses technology to improve supply chains, has reached the top of the CNBC Disruptor 50 list.

Freight forwarding, the official name of the industry that Flexport is disrupting, is a centuries-old, trillionth global activity to match the companies that make things with the companies that carry things by land, sea and air. According to research firm IBISWorld, the industry is usually opaque, filled with mysterious rules, mired in analog processes and has no “major players”.

In other words, it is ripe for failure, at a time when the world is demanding that the industry be disrupted – and reconstructed.

Flexport technology is essential for goods to move around the world, and it has grown rapidly at a time when labor shortages are worrying warehouses and ports, and factory shutdowns in China are facing growing consumer demand.

The company uses data to optimize the movement of cargo on ships, planes, trucks and railways, analyzing costs, improving the efficiency of containers and calculating greenhouse gas emissions for its more than 10,000 customers and suppliers. What is particularly noteworthy is that the platform is used not only by Fortune 500 companies, but also by new brands – the company said its customers have moved nearly $ 19 billion in merchandise to 112 countries in 2021.

“They have a huge target market in which the technology in this market is mostly broken,” says David George, general partner of Andreessen Horowitz, who cited the company’s latest round of $ 900 million in funding. “They have about 2% market share in their market and they win 75% of the time when they are in front of customers, so that’s a very simple formula.”

Flexport founder Ryan Petersen is a lifelong entrepreneur who presents himself as a CEO who wants to lead the entire sector – even his competitors – to decisions.

“Technology plays a big role,” Petersen told CNBC last November. But growth from a small market share, even with the rapid growth experienced by Flexport, will require as much relationship-building as innovation. “We need to persuade many different parties to change the way we work,” he said.

“It’s a matter of his life. He’s curious, he’s determined, he’s overly focused on customers and problem solving. Things like the way he approached the problem in Long Beach are a perfect example of his resilience, perseverance and problem-solving ability. “, – said George. .

Petersen also has a flair for the dramatic, using high-profile issues and Twitter to showcase Flexport’s capabilities. Last October, he drew attention to terrible delays in the port of Long Beach and recommended specific ways to “overcome the bottleneck,” he said.

Petersen wanted to understand the congestion in the ports of Los Angeles and Long Beach, so he rented a boat to see the congestion of ships and containers nearby, finding more than 70 containers anchored with a $ 64 billion cargo awaiting unloading. Problem: the docks were too crowded for the trucks to return the empty containers, so the trucks could not pick up a new full container, so these full containers got stuck on the dock, and the empty ones got on the truck chassis, with the fuller ones stuck on the ships.

“This is negative feedback that is quickly spiraling out of control, and if it continues unabated, it will destroy the global economy,” Petersen wrote on Twitter.

He then tweeted a decision to target a bottleneck in the yard, proposing five recommendations, including an ordinance that redefines zoning rules to allow cargo yards to store empty containers up to six high instead of the previous two limit, and creation of a new temporary container site on state land. The city quickly lifted the restriction on stacking empty containers to just two heights, increasing it to four, and California Gov. Gavin Newsom called him to find out how they could work together. It was called “The Twitter Assault That Saved Christmas”.

Before Christmas Petersen was on Twitter again, this time writing about the shortage of french fries in Japan. McDonald’s has been forced to limit sales in the country due to problems with the purchase of potatoes. Flexport found three cargo planes that were supposed to bring goods from Japan to the US and then fly back empty. Instead, Flexport organized the return of aircraft with 300 tons of potatoes. The trick was far from a long-term fix, but it hit the headlines, and Petersen played the protagonist, demonstrating the power of logistics.

Two months later, the company announced a $ 900 million E-series financing round with a valuation of $ 8 billion involving investors including Andreesen Horowitz, Shopify and Softbank (based in Japan).

“He has big, daring goals, the industry is huge and broken, and there’s a lot of work to do, and that’s a tough problem he’s facing,” George said. “Raising a large combat chest gives him the ability and flexibility to do what he needs to do in the coming years, in terms of introducing new technological products and expanding to new lanes geographically.”

“We have a billion in liquid assets, and we strongly believe in having a fortress-like balance sheet to overcome things like geopolitical crises and stock market downturns,” Petersen told CNBC in March.

After this fundraiser, Petersen shifted his passion for problem solving and Flexport’s logistics experience to a nonprofit space. In early March, Flexport.org announced that it was organizing aid deliveries to Ukrainian refugee facilities across Europe, noting that an estimated 60% of all aid deliveries in response to humanitarian crises had disappeared over the past few decades. due to lack of logistics coordination.

Flexport’s work to improve the movement of goods around the world is part of a wave of technologies that solve supply chain problems. In fact, this year’s Disruptor list has 50 more logistics companies than in any year in the last decade. Two more are in the top ten this year – Lineage Logistics at № 3 and Convoy at № 6. There are other key destroyers, including Flock Freight and CloudTrucks, which specialize in trucking.

Then there are startups that deal with logistics from other perspectives. Gopuff, who wants to deliver food and essentials quickly, is on the list for the third year in a row. Zipline, which became known for its drones to deliver essential medical supplies, is now also shipped to Walmart. Mexican company Jüsto, which deals with product delivery; An airspace that uses artificial intelligence to control the delivery of time-sensitive cargo, such as human organs for transplantation; and Exotec, a French robotics company that uses AI to control the storage of high-density stocks in warehouses.

“I like the idea of ​​solving problems, especially those that have such implications for society,” George said. “It’s a huge, massive space with very, very little technology and the capabilities that you have, if you’re customer-focused and if you can make big moves, you can really create products that people love … it’s amazing.”