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.
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
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
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
“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
“Our gateways in ORD and LAX are bonded,
CCSF facilities and will also be TAPA certified along with HKG in the
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
“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.”