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March 18 2019

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6 The Journal of Commerce | March 18 2019 Spotlight The Journal of Commerce Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, Executive Editor, The Journal of Commerce and Mark Szakonyi 202 872 1234, Managing Editor: Benjamin Meyer 916 716 6272 Managing Editor: Barbara Wyker 908 507 4802, Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, Bill Mongelluzzo West Coast 562 428 5999, Hugh Morley Northeast, Mexico 646 679 3475, Eric Johnson Technology 213 444 9326, Janet Nodar Breakbulk and Heavy Li 251 473 2742, Greg Knowler Europe +44 7976798770, Turloch Mooney Global Ports +852 9011 9109, Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, Data Analyst: Marcin Lejk +44 58 741 62 70, Shipper Engagement Manager: Dustin Braden 646 679 3450, Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 Senior Designer: Sue Abt, 862 371 3534, Designer: Bryan Boyd, 908 910 7849, Publisher: Tony Stein, 770 295 8809, Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 260 6061 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 John Knowles, Senior Sales Executive Europe sales, +44 7779 974677 Allyson Marek, Senior Sales Executive Northeast sales, 862 754 8012 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: 450 West 33rd St., 5th Floor, New York, N.Y. 10001 800 952 3839 Executive Director, Editorial Content, Maritime & Trade, IHS Markit, Peter Tirschwell Executive Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case ©2019 The Journal of Commerce — All Rights Reserved For more information, visit our website, Flexport snags $1 billion in venture capital Freight forwarder Flexport in late February confirmed a long-rumored funding injection of $1 billion led by the venture capital (VC) arm of Japanese investment conglomerate Sobank, shoving the fast-rising logistics company squarely back into a public debate about its differentiation and scale. The investment, a loosely kept secret in logistics VC circles for months, is far and away the largest-ever single cash infusion into a logistics start-up — dwarfing the $185 million invested by VC funds into trucking start-up Convoy in late September and the $356 million invested in Chinese start-up (and Foxconn spinoff) Jusda in January — and even the $304 million already collectively invested in Flexport. It also brings questions back to the surface that have dogged the San Francisco- based forwarder over the last couple years as its war chest of VC money has grown to more than $1.3 billion. "You don't raise a billion without being audited," CEO Ryan Petersen told The Journal of Commerce. "We're audited by KPMG, and Sobank had their own auditor that reviewed our bills of lading and revenue numbers." Petersen said the size of the latest funding round makes Flexport's size and differentiation in the market self-evident. He rejected speculation that new injection would spur acquisitions. The funding brings Flexport's valuation to $3.2 billion, according to industry sources. The company said in a statement that it had $500 million in 2018 revenue and 10,000 "clients and suppliers." That's more than double the $226 million in revenue Petersen said Flexport had in 2017. He said the money will enable the company to build out its physical infrastructure of offices and warehouses while also scaling its engineering team. Flexport will seek to double the number of developers it hires, he said, "until the law of big numbers" prevents that. We don't need a billion for just engineers," he said. "We're not capital- constrained on engineers." On the infrastructure side of things, Petersen said Flexport plans to build a warehousing/cross-docking presence in "every major gateway we operate. The timeline is up to the team. This will let them be unconstrained." Flexport currently operates four such facilities. Petersen also batted away the idea that $1 billion in investment would fuel merger and acquisition (M&A) activity. "This is decades of capital" that allows the company to make "opportunistic investment," he said. "I wouldn't see us doing M&A because I think most M&A doesn't work out." Petersen said the opportunity this funding unleashes is the chance to look at its customer base as a network and "start to get really smart in pricing. We can say, 'Hey, we don't need to make money on every single shipment.' We've always operated on the philosophy that we'll be cash-flow-positive on every shipment. And now you can start to look at it strategically as a network and say, 'Where do I need baseload volumes?' and be willing to go below cost for that customer in order to get another customer on board. We haven't had the balance sheet to play that game." Memphis grey pool plan crumbles A coalition including shippers attempting to solve chassis problems in Memphis, Tennessee, has encountered an obstacle in its effort to launch an interoperable grey pool. Two chassis providers — TRAC Intermodal and DirectChassis Link Inc. (DCLI) — killed a proposed solution agreed upon by an association of ocean carriers and coalition of beneficial cargo owners (BCOs), truckers, and Class I railroads. TRAC and DCLI contend the interoperable pool isn't the answer, at least not right now. Flexi-Van Leasing supported the initiative. An interoperable pool — also known as a grey pool — would have allowed truckers to pull any chassis instead of being restricted to a specific provider. Currently, the trucker is told which chassis to use on carrier haulage and some merchant haulage by being directed to a private pool. The objection given in late February is a blow for the Supply Chain Innovation Team formed by the Federal Maritime Commission targeting equipment shortages causing hefty demurrage and detention bills. The most

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