When was the last time you ate a simple plain bagel?  Room temperature, non-toasted, no spread, no toppings.

Unless you were literally starving, you probably only did it once because it tasted like a cardboard box. Not tasty. Not sexy.

Well, there’s a trillion-dollar global industry out there that’s almost un-sexy as that plain bagel, but ripe for genuine start-up technology disruption!

I’m talking about something called international freight forwarding, a small slice of the plain old shipping business.

Size Matters

See, anything over 330 pounds, or 150 kilograms for you metric lovers, becomes “freight”, and it gets sent using non-traditional parcel methods.

Smooth running large-scale businesses require global manufacturing and retail chains that are truly international.  Freight delivery, however, can be a very choppy affair; handed off between separately owned and operated methods of transportation like boats, planes, trains, and trucks for the last mile.

Flexport - Sexy Freight Shipping

To make matters worse, add in customs and border protection regulations and inspections for each departing and receiving country and you’ve got quite a task!

Freight forwarding services are the companies handling the details of negotiating best prices for each leg of the journey, with each transporter, and working the various customs paperwork.

Unfortunately, the tools most freight forwarding providers have available to them, up until recently, have been Stone Age.  Mostly a mix of Excel spreadsheets, email, fax, and paper manifests to ship an endless stream of items around the world.

This allows for basic documenting of shipping information, but doesn’t provide any real time insight when breaks occur in the supply chain or overspending.

It’s a Revolution

Flexport - Sexy Freight ShippingA startup called Flexport has flipped this archaic industry upside down by providing free software that indexes all available carriers into a searchable database used to organize and track shipments.

The crazy part is that Flexport offers its own shipping service optimized from all the collected shipping data it has crunched in its own system.
The software runs analytics accounting for all routes, rates, speeds, and customs compliance data that allows shipments to be delivered in the most efficient and cost effective manner possible.

This is like a self-toasting bagel that gets better every time you eat it and provides feedback on how good it tastes!

Ryan Peterson, Flexport CEO, tells industry experts “We’re bringing transparency to a black box industry”.

And the industry is listening!  Flexport has captured $26.9 million in venture funding, and has grown the volume of goods it has sent this year along by 16x.

In 2016, Flexport moved freight to, or from, 64 countries for over 700 clients, totaling $1.5 billion in merchandise shipped.

Flexport - Sexy Freight Shipping


The 800 Pound Gorillas

But what about the 800lb industry gorillas, FedEx & DHL, and all their brainwashing “I have logistics people” commercials?

The infrastructure they have built for their massive operations just isn’t nimble enough to pivot to the newer, more efficient, technology Flexport, and other startups are using.

When DHL bought three traditional freight forwarding service companies for $15 billion, they ended up spending $960 million with IBM for an IT Backbone that completely failed.  The IT project was written off as a complete loss!

All of this while startups like Flexport and Expeditors continue to grab market share.

Bottom line, boring business can be big business if the right disruptive technology is applied.

Count on your Dent Research team to provide you the latest insights into technology that you can profit from for market plays.

The content of our articles is based on what we’ve learned as financial journalists. We do not offer personalized investment advice: you should not base investment decisions solely on what you read here. It’s your money and your responsibility. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk. Don’t trade in these markets with money you can’t afford to lose. Delray Publishing LLC expressly forbids its writers from having a financial interest in their own securities or commodities recommendations to readers.

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