Flexport is an e-commerce platform for shipping goods globally. In this article, learn how Flexport makes money by taking a closer peek at its business model, revenue streams, and scaling strategies.
Flexport charges fees for each transaction that occurs on their digital supply chains. They charge these fees through a subscription model.
They offer not just shipping but a fully digital solution for your entire logistics needs. You get everything from one source, including customs clearance, packaging, and delivery tracking.
Their bundled business solutions include logistics, trading, financing, and supply chains.
If Ring co-founders and CEO Jamie Siminoffsays he’s willing to spend his own time promoting Flexport, then the company must be doing something right.
If you’re looking to optimize your company’s global logistics network, then Flexport has got you covered.
To get an idea of how successful Flexport has been, just look at its clients: Georgia Pacific, Nomad, Ring, and others.
Suppose there are any freight-related issues your company might be facing. In that case, Flexport provides solutions through a wide variety of services that are fully digitalized for the modern world, post-pandemic era.
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Business Model of Flexport
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Cloud-Based Platform Model
Most forward shipping before Flexport involved people calling each other on the phone to arrange shipments. As Siminoff describes, this was an inefficient system because no computers weres involved.
It’s not easy to pinpoint who’s responsible for a shipment when it travels from one country to another.
With Flexport, tracking is extremely simple. Customers don’t even have to keep records since the platforms update themselves automatically. However, if they want hard copies, they’re always there for them.
As Flexport’s data processing capabilities are top-notch, the data is secure, and the platform allows for complex data analysis, even if the data itself is complicated.
According to Ryan Peterson, a lot of legacy companies have gone bankrupt because of COVID-19 quarantines.
Forward-thinking, high-technology companies like Flexport have helped legacy companies adapt to these tumultuous, post-pandemic times by helping them become digital enterprises.
Peterson explained that the shipping industry has suffered from inefficiency for decades.
For example, a large number of shipping companies ship their cargos and their corresponding freight bills separately. If anything goes wrong with the plane transporting their freight bill, the freight bill is held up at the airport, and the goods are left sitting in the harbor for days.
Since Flexport is a fully digital platform, they can send their certificates electronically, and if there’s a delay, they have several other delivery options.
So, Flexport doesn’t ever need to have its customers deal with situations where the cargo arrives before the manifests and customs officials are ready for them.
How Flexport Makes Money?
Flexport has excellent sea, air, and land shipping options. They’re especially good at sea shipping.
They track their container loads using transponders and observe them on their platform. Additionally, they calculate shipping times based on well-aggregated numbers, which allows them to plan better and reduce shipping costs.
Less than containers (LCL) shipments are also available for companies that want to ship their products in smaller quantities.
With non-digitized forward freight rates, there are numerous opportunities for costly mistakes because of space calculations with multiple customers using the same container in LCL.
Since Flexport is also a software company, they’re able to collect, analyze, aggregate, and store large quantities of sensitive personal and financial information securely.
With this level of accuracy, they can know exactly where each cubic meter of container volume is and determine whether it is suitable for storing a particular product or not.
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Flexport’s shipping services include the same reliability, transparency, cost-effectiveness, and speed as its ocean freight services.
Several former airlines have been brought on board by Flexport to help them navigate through the world of international trade.
They offer ground delivery so that everyone involved in the shipment can collaborate in real-time. For example, they integrate their software with GPS technology to allow for real-time updates regarding traffic conditions.
Customs agents delay people at airports, so they know firsthand the financial dangers and legal headaches of shipping from one place to another.
Flexport employs its own team of customs agents to ensure that expensive mistakes aren’t made when handling shipments that need to be cleared by customs.
Before an item is actually sent out, every Flexport customer has their shipping data run through our Harmonized System Codes so we know exactly which items need to be tracked.
The United States and several other nations have been involved in a trade war with the People’s Republic of China since 2018. However, the COVID-19 pandemia has not improved relations between these two powers.
Shippers need to worry about tariffs, quarantine regulations, and other unexpected regulations. Flexport’s global shipping advisory services can help protect shippers from these “black swan events”.
Duty drawback is one of the services that Flexport provides its clients. It allows them to avoid having to file with customs offices in various countries to obtain refunds for import taxes.
Even in Shakespeare’s the merchant of Venice, risks were a very real part of the shipping merchants’ world and almost costAntonioa a pound of his own flesh! If you ship, your goods will be insured!
Flexport offers to handle the paperwork for clients’ insurance policies, and if the client needs help filing an insurance claim, Flexport will also take care of that too.
Because black swans are part of the logistics industry, it is important to be able to finance unexpected expenses.
Flexport has been able to leverage its position in the market to negotiate favorable financing terms from banks, and they don’t need to provide any “pound of flesh” as security.
Order management enables visibility and control at the item, product, and order levels through real-time analytics and reporting.
Sustainability is an important issue for any business today, including shipping.
Through our partnership with Carbonfund.Org, we’re able to help mitigate climate change by offering carbon offsets for flights, hotels, and car rentals.
Flexport also offers a free calculator for calculating shipping emissions.
Flexport’S API allows shippers to choose whichever option they prefer.
They can integrate their own software system with our online shipping platform, or they can use the pre-built integrations we provide. We support most EDI formats.
Jamie Seminoff has written about Ring products containing lithium-ions, which qualify as dangerous goods (LGDs). He says that Flexport removes a lot of risk and hassle from the process by making sure that all necessary documentation is in place.
Forwarders must be certified by IATA to move certain types of cargo. Only Flexport offers both forwarder certification and IATA accreditation.
Flexport Yearly Revenues
Looking at Flexport’s yearly revenue over a 4 year period, Flexport has experienced significant growth with some volatility; there was a severe drop in 2018 and a fivefold increase in 2020.
Is Flexport Profitable?
Flexport makes a profit on its own revenue numbers and the fact that it has done a 5x increase in sales since 2019. It is valued at $3.2 billion.
Opinions of Two CEOs
People who don’t know of Mr. Siminoff might be wondering why he’s been mentioned so often.
After getting insulted by venture capitalist sharks on the reality TV series, Shark Tank, Siminoff turned his startup into the leading provider of smart locks for doors. Before he sold it to Amazon for one hundred million dollars.
He has the vision and insight to see potential in new ventures, so when he talks about the potential of Flexport he is someone worth listening to.
The answer to the first part of the title, “Why is Flexport so successful?”, was given by Flexport CEO and founder, Siminoff himself. He says that he doesn’t have to be deeply engaged with his company to keep it running smoothly.
Flexport allows CEOs to focus on their core competencies and let someone else handle logistics. It gives them the freedom to be visionary leaders who create new industries.
To provide this kind of freedom for CEOs, FlexPort needs to be both a forward freighter and a tech company. That’s why FlexPort CEO Ryan Peterson was able to negotiate a $1 billion deal with SoftBank while he wore his slippers.
With billionaire deal makers like Peterson and Siminoff leading the way, it is clear that Flexport isn’t just a fad — it’s a real business that is making a profit too.
Peter Thiel, who helped found PayPal, Facebook, and Palo Alto Networks, has also invested in shipping startup Flexport.
Conclusion: How Does Flexport Make Money?
After going through the entire guide, we’ve concluded the article by covering every aspect of the business of Flexport, including its background, the different revenue streams used to generate revenue, its fascinating facts, and so on.
Flexport has been upgrading its infrastructure, order management software, customs compliance tools, etc. in order to improve customer experience.
Flexport is one company that has come up with some amazing ideas. We’ve seen them grow from an idea into a successful business.
It seems that they’re at the top when it comes to what they do. But if they keep going forward with the same energy they’ve shown so far, then there’s no telling where they might go from here.
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