FlyingTypers Logo
   Vol. 18 No. 32
Friday May 3, 2019

The Shah Of Flexport

Neel Shah Of Flexport

Hot on the heels of Flexport’s latest funding infusion, FlyingTypers spoke to Neel Jones Shah, the forwarder’s SVP and Global Head of Air Freight.

Ryan Petersen      U.S.-based Flexport is not lacking ambition. Formed in 2013 and offering a full suite of air and ocean forwarding services, it has been open about its determination to disrupt forwarding and logistic markets by using its powerful technology platform to deliver “deep visibility and control, predictable supply chain costs, and more reliable transit times”.
     Last month it announced a $1bn injection of funds, led by the venture capital (VC) arm of Japanese investment conglomerate Softbank. CEO Ryan Petersen (right) said the war chest would be used to build out Flexport’s physical infrastructure of global warehouses and offices, including building warehousing/cross-docking facilities at major gateways.
     Neel Jones Shah told FlyingTypers that for the company’s air freight forwarding network this would result in major service and infrastructure upgrades in the coming months. “We will be using our recently raised funding to do three primary things: invest in our platform/technology, build/acquire infrastructure to support our customers and hire expertise,” he told Flying Typers.
     “On the specific question of infrastructure, we are continuing to build out our gateway strategy so we have true end to end control of our customer’s freight in the key trade lanes.
     “We are currently a few weeks away from opening our brand new state of the art gateway in ORD which will complement its sister gateway in LAX.
     “In addition, we will soon be moving into our new space in HKG at the AFFC which is double our old footprint and will incorporate the latest screening technology as we prepare for HK CAD requirement of 100% screening for all outbound flights including freighters.
     “Our gateways in ORD and LAX are bonded, CCSF facilities and will also be TAPA certified along with HKG in the near future.”
     Additional network enhancements are also under consideration. “Our teams are in the process of evaluating our next round of investments that will include additional gateways in the U.S. as well as key European hubs,” he said.
     Despite the threat of further trade policy disruption to the company’s key Transpacific lane due to the U.S.-China trade war, Shah was optimistic about the rest of 2019, He said that although the post-Chinese New Year period was “one of the slowest that I’ve ever experienced in my 17 years in the business” demand would gradually improve.
     “After the holiday was officially over, factories took much longer to get started and volumes just still haven’t even come close to what they were pre-CNY,” he said. “But we are anticipating that things will start to pick up by the end of March, so by the 3rd and 4th week of March and into early April – the traditional Q1, end of Q1 push.”
     And while there are clouds over China and Hong Kong both of which are seeing slower than expected export demand growth, elsewhere in Asia there are positive signs. South East Asia and Japan are “performing strongly”, for example, with the former benefitting from a shift of manufacturing from China due to U.S. tariffs on Chinese exports.
     Shah also thinks China will rebound. “Looking at the balance of the year, I am extremely optimistic, as I think most people are now, that the U.S. and China are going to solve their trade dispute, and may even roll back even the 10% tariff,” he said. “And if they do that, clearly Chinese exports are going to become extremely competitive once again.
     “They had lost a little bit of their edge because of the tariff and the overall labor environment in China, but if they roll back the 10%, China’s going to become competitive again which will slow the exodus of business to other parts of Asia. If there is a deal, we could see a pretty strong second half of the year out of the main Asia markets.
     “However, I don’t think a China rebound would slow down the growth of places like Vietnam, Malaysia and Cambodia. I think you’re going to continue seeing these places growing at double digit rates.
     “Without a doubt they are the new manufacturing hubs for Asia. The issue is the infrastructure has to catch up. You can’t just move into the country and think that they have the trained labor force, they have the roads, the trucks, the warehousing, the airports. It doesn’t happen overnight.”
     He said signs that U.S. demand was slowing were also overstated. “Things are slowing down a little bit in the U.S. but it’s by no means heading into a recession any time soon,” he said.      “Companies brought in a lot of inventory to try and beat the tariffs at the end of last year.
     “I think the U.S. economy is still quite strong. People are still consuming and buying, so we’re ok there, and I think that because of the heavy push to beat tariffs at the end of last year, companies had a lot of inventory so they just didn’t need to ship as much in Q1. They’re just drawing it down. Hopefully things will start to pick back up in the April time period.”
     “I think later on this year there will likely be an inventory build and I think it will impact ocean first - people will start shipping on ocean and then you will see some of that ocean conversion in the latter half of the year.”

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title
FT042219Vol. 18 No. 29
Supermarket In The Sky
Chuckles for April 22, 2019
Celebrating Earth Day 2019
FT042419Vol. 18 No. 30
Air Cargo Is About People
Chuckles for April 24, 2019
Go Go Guillaume
Brandon Gets It
AFKLMP Change & Forwarders Cheer

FT050119Vol. 18 No. 31
Boeing Pledges MAX Safety
Reimagine Awards As More Rewarding
JFK Cargo Gets A Pulse

Publisher-Geoffrey Arend • Managing Editor-Flossie Arend •
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend • Advertising Sales-Judy Miller

fblogoSend comments and news to geoffrey@aircargonews.com
Opinions and comments expressed herein do not necessarily reflect the views of the publisher but remain solely those of the author(s).
Air Cargo News FlyingTypers reserves the right to edit all submissions for length and content. All photos and written material submitted to this publication become the property of All Cargo Media.
All Cargo Media, Publishers of Air Cargo News Digital and FlyingTypers. Copyright ©2018 ACM, Inc. All Rights Reserved.
More@ www.aircargonews.com

recycle100% Green