Logistics Tech

The opaque systems and processes of global trade

JT dives into Flexport, which has the mission to be the operating system for global trade

John Thomey
John Thomey
Feb 18, 2021
The opaque systems and processes of global trade
🔒 Member-only content. 🔒
OR

Happy Thursday! John, here.

Welcome back to Urban Tech, the best place for people thinking about the intersection of cities and tech. Over 700 of you have joined us since we started publishing last summer, and I promise the journey is just getting started. 🏁

Today's edition is one that I've been working on over the last month and it’s a fascinating area. It's a topic and company that I've been watching for a few years now.

We will explore the wild world of logistics tech, an area that I find fascinating because the movements of goods and supply chains revolve mostly around cities -- given that major ports typically lead to urban development wherever they end. To do all this, we'll examine Flexport, which has the mission to be the operating system for global trade.

Before we dive in, a couple of notes will share a sneak peek of Urban Tech’s newest employee, who starts on Saturday at the end of this essay. 🐶 I’ll be honest; he’s kind of a stud; I’m a little jealous that’s he’s very likely to show me up by like week 3.

Tomorrow, Urban Tech will be dropping a new podcast. I’ll be sending out a brief note with it to let you know when it’s live tomorrow morning.

Check out the UT Podcast

Before we dive into the world of global, I want to set the agenda a tad. The reason is that ~90% of UT’s analysis and focus are on American cities and innovation. I’m an American, who has only lived in America, and my experience in politics and tech has predominately focused on North America.

One of the reasons that I love Urban Tech and getting to explore Flexport is that so many urban tech companies are not only focused on changing U.S. cities, but increasingly the impact is being felt globally — so let’s get to it.

🔦 The opaque systems and processes of global trade

Like most Americans, I fall into the predictable traps of thinking the U.S. is the center of the world — there’s no more explicit example of this not being the case than when you zoom out a bit and consider the global context of trade. From a volume perspective, some of the world’s most significant chokepoints for international trade occurs in South East Asia.

While getting to connect with the Flexport team and see their platform, I was honestly blown away by the global scale of trade and how many players are involved. I’m hoping that you’ll have a little bit of a better idea of how innovation is transforming global trade and logistics by the end of this.

In today’s edition we’ll look at a few things:

  • Flexport as a business and its platform
  • The processes of global trade that make Flexport valuable to international firms
  • Finally, we’ll zoom into Flexport Org, which is a unique initiative that shows the power of Flexport unlocking global trade visibility

But, what is Flexport?

Flexport is a logistics platform and global freight forwarder that over 10,000 organizations use worldwide to make trade more effective and efficient. Since I’m not a tech expert, and I don’t want to dive too far into the tech stack today, but I do want to give you some idea of the tech stack.

From my conversations with the Flexport team, I feel like the easiest way to understand it for today’s edition is that Flexport’s cloud platform provides a single truth source to shipping and logistics firms. By having a single source of truth and powerful analytics, shippers and logistics firms can make more strategic, data-informed decisions.

Ring, Outdoor Voices, Bombas, and Gerber, are a few well-known consumer-facing brands that use Flexport to power their shipping processes.

These firms can gain transparency in their trade operations that would be pretty much impossible without a platform like Flexport. Flexport’s team explained to me, many of the inefficiencies of global trade come from the opaqueness of systems and goods moving through it. It seems like one of those things where there can never be enough data.

I know that’s a really techie thing to say, but in this case, I actually think it’s true.

How big of a business is Flexport?

Flexport shared with Urban Tech that its revenue in 2020 was $1.29 billion, which was almost 2x growth from its revenue in 2019. For readers who care about Flexport's valuation and investors, Crunchbase pegs Flexport has raised a total of $1.3 billion in capital from investors, including Softbank, Founders Fund, First Round Capital, and Bloomberg Beta.

Flexport's platform includes logistics across air, ocean, and ground shipping modes. All to say, they basically can do any kind of logistics imaginable besides inter-planetary logistics. Honestly, I wouldn't be too shocked if we saw it one day. I like to focus on things on this planet, but eventually, international trade will go orbital.

Before we get too far out there, let's zoom into global trade a bit to see why firms engaging in international trade would need a platform like Flexpiort.

The Inefficiencies within Global Trade

Flexport is not only crushing it as a business and having a more broad impact because despite the year being 2021 there's still a lot of inefficiency in supply chains and global trade.

While it can sometimes feel easy to the rapid pace of change in supply chains and trade is a recent phenomenon driven by tech giants like Amazon, the story of global trade's expansion needs to be looked at over the last ~50 years.

Take a look at the graph below.

Source

Things have been changing incredibly fast in trade for decades. With innovations like cloud technology and advanced analytics, we can start to remove some of the most significant innovation issues in the space; more on that in a second.

Flexport’s product team hit home for me was just how crucial viability to all this, and that’s the opportunity to me where they can drastically improve the market. Bryant University Professor Michael Gravier explains this idea incredibly well in a piece for Supply Chain Management Review:

There have been quite a bit of supply chain media attention lately regarding how supply chain managers want more transparency and more visibility into the extended supply chain. There seems to be a sentiment that if only they could see what was going on, they could make better decisions, integrate operations more efficiently, and collaborate across firm boundaries.

Firms like Procter and Gamble show the power and possibility of sharing information in supply chains. P&G engages in continuous planning and execution. Supply chain information isn’t updated periodically in weekly, monthly, or quarterly forecasts and plans—plans are continuously responding to information and operations adapt when required…

The Low Hurdle: There are two major hurdles that companies will have to overcome to harvest the benefits of supply chain transparency. One is avoiding the “authoritarian regime” mindset. Bigger companies tend to throw their weight around because adding more information to track, and adding more players into the decision-making process, will slow decision-making to a crawl. It will lead to gridlock due to conflicting goals, it will slow agility and responsiveness. Research shows a massive drop-off in consensus-making when you go from five to six people involved in making a decision, a fact that your personal experience likely corroborates. In order to overcome this hurdle and achieve deep transparency, supply chain relationships will need to focus on the process of planning and executing, most especially on the power of incentives to contribute to the relationship and how to create healthy conflict and resolution. This will require changes to contracts and supplier performance evaluation processes. Expect to see more use of approaches like performance-based and Vested outsourcing.

The High Hurdle: The second hurdle results from international relationships, and where the first hurdle will be overcome relatively quickly by supply chain managers willing to adapt and innovate, the second lies outside their control. Currently, we exist in a global world that is dependent on cross-border data flows that has adopted no inter-operability standards. Data is governed by trade treaties. The world has yet to adopt a framework for dealing with data flows, despite the fact that data flows have increased exponentially for decades. This can be a real issue between entities with strong data industries such as the EU, China, and the US, and an even bigger issue for smaller or developing countries. Lack of binding and coherent rules for cross-border data flows holds back progress and, especially for smaller and poorer countries, creates another hurdle to joining world trade—which also means it’s more difficult for US companies to enter their markets. Clearly, data is unique and isn’t adequately covered by trade treaties.

I love Michael’s explanation because Flexport helps firms clear both these hurdles with its product. The low hurdle is pretty easy to see. In theory, by people using the Flexport platform more, healthier supply chain relationships will result through better communications and insights between all parties.

The high hurdle he points out is a massive problem. While I’m a huge Flexport fan, its role in the macro cross-border data flow conversation is relatively small compared to companies like Facebook.

But, in the space of shipping and trade, which has a massive global impact, Flexport’s platform is at least playing some kind of important part to advance these conversations healthily through more visibility. Below is a recent headline from a Flexport product launch earlier this week.

Zooming Into Flexport.org

When talking with the Flexport team, one of my favorite parts of the conversations was learning about Flexport.org, and the thoughtful work their team is doing. Here’s how Flexport describes Flexport.org:

Flexport.org is a critical part of the Flexport mission. We believe that technology should help solve humanity’s most pressing challenges. Given our unique platform and services, and our position in the freight forwarding industry, we have an unparalleled opportunity and responsibility to help others around the globe. Flexport.org offers programs for our clients, NGOs, and donor organizations that include carbon offsets, discounted shipping and pro bono counseling.

Flexport.org also has a TON of urbanism and city vibes going on, which obviously is essential to this media company. Susanne (Susy) Schöneberg is the head and founder of Flexport.org. When we chatted, we spent the first 15 minutes of the conversation talking about her graduate studies at UC Berkely, where she got to study with leading urban tech expert Molly Turner.

Personally, Turner's work, particularly her podcast with Jim Kapsis, has helped me get a ton smarter on this space.

That's just an anecdotal example, but if you zoom into the work of Flexport.org, it's easy to see how cities and urban dwellers benefit from more transparent global trade. In its 2020 annual report, Flexport.Org shared some of the ways its helped shippers and logistics firms during the COVID pandemic.

Here are just a few examples of the ways Flexport's services have helped firms globally meet the global pandemic:

Like Flexport explains in the graphic above, freight and shipping have a massive impact on the volume of goods moving through supply chains — not to mention the high demands globally for healthcare goods like N95 masks.

I’m hoping I’ll get to connect with the Flexport team again soon. As ports and trade infrastructure continues to meet new demands and challenges, there are so many questions that I feel like I could ask them to better understand the movement of goods through cities.

That’s it for today’s edition!

I hope you have a fantastic weekend. Some fun news from Urban Tech HQ (aka my downtown LA apartment): we are doubling our headcount with a new chief paw officer this weekend.

So if you hear some puppy barks and sounds on the podcast starting next week, I blame the new guy…. 🐶
✌️JT

Happy Thursday! John, here.

Welcome back to Urban Tech, the best place for people thinking about the intersection of cities and tech. Over 700 of you have joined us since we started publishing last summer, and I promise the journey is just getting started. 🏁

Today's edition is one that I've been working on over the last month and it’s a fascinating area. It's a topic and company that I've been watching for a few years now.

We will explore the wild world of logistics tech, an area that I find fascinating because the movements of goods and supply chains revolve mostly around cities -- given that major ports typically lead to urban development wherever they end. To do all this, we'll examine Flexport, which has the mission to be the operating system for global trade.

Before we dive in, a couple of notes will share a sneak peek of Urban Tech’s newest employee, who starts on Saturday at the end of this essay. 🐶 I’ll be honest; he’s kind of a stud; I’m a little jealous that’s he’s very likely to show me up by like week 3.

Tomorrow, Urban Tech will be dropping a new podcast. I’ll be sending out a brief note with it to let you know when it’s live tomorrow morning.

Check out the UT Podcast

Before we dive into the world of global, I want to set the agenda a tad. The reason is that ~90% of UT’s analysis and focus are on American cities and innovation. I’m an American, who has only lived in America, and my experience in politics and tech has predominately focused on North America.

One of the reasons that I love Urban Tech and getting to explore Flexport is that so many urban tech companies are not only focused on changing U.S. cities, but increasingly the impact is being felt globally — so let’s get to it.

🔦 The opaque systems and processes of global trade

Like most Americans, I fall into the predictable traps of thinking the U.S. is the center of the world — there’s no more explicit example of this not being the case than when you zoom out a bit and consider the global context of trade. From a volume perspective, some of the world’s most significant chokepoints for international trade occurs in South East Asia.

While getting to connect with the Flexport team and see their platform, I was honestly blown away by the global scale of trade and how many players are involved. I’m hoping that you’ll have a little bit of a better idea of how innovation is transforming global trade and logistics by the end of this.

In today’s edition we’ll look at a few things:

  • Flexport as a business and its platform
  • The processes of global trade that make Flexport valuable to international firms
  • Finally, we’ll zoom into Flexport Org, which is a unique initiative that shows the power of Flexport unlocking global trade visibility

But, what is Flexport?

Flexport is a logistics platform and global freight forwarder that over 10,000 organizations use worldwide to make trade more effective and efficient. Since I’m not a tech expert, and I don’t want to dive too far into the tech stack today, but I do want to give you some idea of the tech stack.

From my conversations with the Flexport team, I feel like the easiest way to understand it for today’s edition is that Flexport’s cloud platform provides a single truth source to shipping and logistics firms. By having a single source of truth and powerful analytics, shippers and logistics firms can make more strategic, data-informed decisions.

Ring, Outdoor Voices, Bombas, and Gerber, are a few well-known consumer-facing brands that use Flexport to power their shipping processes.

These firms can gain transparency in their trade operations that would be pretty much impossible without a platform like Flexport. Flexport’s team explained to me, many of the inefficiencies of global trade come from the opaqueness of systems and goods moving through it. It seems like one of those things where there can never be enough data.

I know that’s a really techie thing to say, but in this case, I actually think it’s true.

How big of a business is Flexport?

Flexport shared with Urban Tech that its revenue in 2020 was $1.29 billion, which was almost 2x growth from its revenue in 2019. For readers who care about Flexport's valuation and investors, Crunchbase pegs Flexport has raised a total of $1.3 billion in capital from investors, including Softbank, Founders Fund, First Round Capital, and Bloomberg Beta.

Flexport's platform includes logistics across air, ocean, and ground shipping modes. All to say, they basically can do any kind of logistics imaginable besides inter-planetary logistics. Honestly, I wouldn't be too shocked if we saw it one day. I like to focus on things on this planet, but eventually, international trade will go orbital.

Before we get too far out there, let's zoom into global trade a bit to see why firms engaging in international trade would need a platform like Flexpiort.

The Inefficiencies within Global Trade

Flexport is not only crushing it as a business and having a more broad impact because despite the year being 2021 there's still a lot of inefficiency in supply chains and global trade.

While it can sometimes feel easy to the rapid pace of change in supply chains and trade is a recent phenomenon driven by tech giants like Amazon, the story of global trade's expansion needs to be looked at over the last ~50 years.

Take a look at the graph below.

Source

Things have been changing incredibly fast in trade for decades. With innovations like cloud technology and advanced analytics, we can start to remove some of the most significant innovation issues in the space; more on that in a second.

Flexport’s product team hit home for me was just how crucial viability to all this, and that’s the opportunity to me where they can drastically improve the market. Bryant University Professor Michael Gravier explains this idea incredibly well in a piece for Supply Chain Management Review:

There have been quite a bit of supply chain media attention lately regarding how supply chain managers want more transparency and more visibility into the extended supply chain. There seems to be a sentiment that if only they could see what was going on, they could make better decisions, integrate operations more efficiently, and collaborate across firm boundaries.

Firms like Procter and Gamble show the power and possibility of sharing information in supply chains. P&G engages in continuous planning and execution. Supply chain information isn’t updated periodically in weekly, monthly, or quarterly forecasts and plans—plans are continuously responding to information and operations adapt when required…

The Low Hurdle: There are two major hurdles that companies will have to overcome to harvest the benefits of supply chain transparency. One is avoiding the “authoritarian regime” mindset. Bigger companies tend to throw their weight around because adding more information to track, and adding more players into the decision-making process, will slow decision-making to a crawl. It will lead to gridlock due to conflicting goals, it will slow agility and responsiveness. Research shows a massive drop-off in consensus-making when you go from five to six people involved in making a decision, a fact that your personal experience likely corroborates. In order to overcome this hurdle and achieve deep transparency, supply chain relationships will need to focus on the process of planning and executing, most especially on the power of incentives to contribute to the relationship and how to create healthy conflict and resolution. This will require changes to contracts and supplier performance evaluation processes. Expect to see more use of approaches like performance-based and Vested outsourcing.

The High Hurdle: The second hurdle results from international relationships, and where the first hurdle will be overcome relatively quickly by supply chain managers willing to adapt and innovate, the second lies outside their control. Currently, we exist in a global world that is dependent on cross-border data flows that has adopted no inter-operability standards. Data is governed by trade treaties. The world has yet to adopt a framework for dealing with data flows, despite the fact that data flows have increased exponentially for decades. This can be a real issue between entities with strong data industries such as the EU, China, and the US, and an even bigger issue for smaller or developing countries. Lack of binding and coherent rules for cross-border data flows holds back progress and, especially for smaller and poorer countries, creates another hurdle to joining world trade—which also means it’s more difficult for US companies to enter their markets. Clearly, data is unique and isn’t adequately covered by trade treaties.

I love Michael’s explanation because Flexport helps firms clear both these hurdles with its product. The low hurdle is pretty easy to see. In theory, by people using the Flexport platform more, healthier supply chain relationships will result through better communications and insights between all parties.

The high hurdle he points out is a massive problem. While I’m a huge Flexport fan, its role in the macro cross-border data flow conversation is relatively small compared to companies like Facebook.

But, in the space of shipping and trade, which has a massive global impact, Flexport’s platform is at least playing some kind of important part to advance these conversations healthily through more visibility. Below is a recent headline from a Flexport product launch earlier this week.

Zooming Into Flexport.org

When talking with the Flexport team, one of my favorite parts of the conversations was learning about Flexport.org, and the thoughtful work their team is doing. Here’s how Flexport describes Flexport.org:

Flexport.org is a critical part of the Flexport mission. We believe that technology should help solve humanity’s most pressing challenges. Given our unique platform and services, and our position in the freight forwarding industry, we have an unparalleled opportunity and responsibility to help others around the globe. Flexport.org offers programs for our clients, NGOs, and donor organizations that include carbon offsets, discounted shipping and pro bono counseling.

Flexport.org also has a TON of urbanism and city vibes going on, which obviously is essential to this media company. Susanne (Susy) Schöneberg is the head and founder of Flexport.org. When we chatted, we spent the first 15 minutes of the conversation talking about her graduate studies at UC Berkely, where she got to study with leading urban tech expert Molly Turner.

Personally, Turner's work, particularly her podcast with Jim Kapsis, has helped me get a ton smarter on this space.

That's just an anecdotal example, but if you zoom into the work of Flexport.org, it's easy to see how cities and urban dwellers benefit from more transparent global trade. In its 2020 annual report, Flexport.Org shared some of the ways its helped shippers and logistics firms during the COVID pandemic.

Here are just a few examples of the ways Flexport's services have helped firms globally meet the global pandemic:

Like Flexport explains in the graphic above, freight and shipping have a massive impact on the volume of goods moving through supply chains — not to mention the high demands globally for healthcare goods like N95 masks.

I’m hoping I’ll get to connect with the Flexport team again soon. As ports and trade infrastructure continues to meet new demands and challenges, there are so many questions that I feel like I could ask them to better understand the movement of goods through cities.

That’s it for today’s edition!

I hope you have a fantastic weekend. Some fun news from Urban Tech HQ (aka my downtown LA apartment): we are doubling our headcount with a new chief paw officer this weekend.

So if you hear some puppy barks and sounds on the podcast starting next week, I blame the new guy…. 🐶
✌️JT

The opaque systems and processes of global trade

John Thomey

John Thomey is a founder of Urban Tech, a newsletter and podcast. He’s a graduate student at the University of Southern California, studying Public Policy and Urban Planning.

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