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April 29 2019

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16 The Journal of Commerce | April 29 2019 International Maritime TEU of US imports in 2018. That figure includes volume moved under Flexport house bills of lading as well as volume moved via the company's network of agent non-vessel-operat- ing common carriers (NVOs). It does not include "cargo under manage- ment," volume where Flexport is providing some service related to the lifecycle of a shipment, but where those TEU would be moving under its clients' direct contracts with carriers. Ferreira's estimate compares with just 12,462 TEU that show up in PIERS AMS data for 2018. The source of that discrepancy is up for debate. Ferreira believes it's due to Flexport masking data on its AMS filings, data his team was able to unspool. A Flexport spokesperson told The Journal of Commerce that the nature of its agency model means the volume under its control isn't well reflected in AMS data. Ocean Audit uses an artificial intelligence- and machine learn- ing-based process to identify and recover ocean freight spend for 15 Fortune 100 companies and six of the top 20 global forwarders. Ferreira's process isolates historic vessel voyages where 90 percent of the invoices contained errors that resulted in overcharges. According to Ferreira, in the majority of cases, the overcharge capital-backed logistics services pro- vider ever, underlined by its recent $1 billion funding round, led by the SoftBank Vision Fund. Flexport has not — and likely will not — disclose its container volumes; as a privately held company, it is under no obliga- tion to do so. In April 2018, the company inti- mated publicly that its 2018 volume would be at least 108,000 TEU, extra- polated from the 9,000-TEU per month it said it was moving at the time. The projection prompted skep- ticism among forwarding competi- tors, ocean carriers, and shippers, and an analysis of advanced manifest sys- tem (AMS) data from PIERS, a sister product of The Journal of Commerce within IHS Markit, also called into question whether Flexport was mov- ing the container volumes claimed. A more recent analysis con- ducted by Steve Ferreira, founder and CEO of freight audit services provider Ocean Audit Inc., estimates that Flexport actually moved 80,336 DETERMINING THE AMOUNT of cargo freight forwarder Flexport moves, as well as the capacity it has secured directly with liner carriers, has been an elusive exercise, but an analysis provided to The Journal of Commerce suggests the company is moving roughly 80 percent of the US import volume it estimated in April 2018. In a forwarding industry where market relevance is typically mea- sured by one variable — volume moved on forwarders' own contracts with ocean carriers — the topic of how much volume Flexport moves, as well as what percentage of that volume it moves under direct con- tracts, is of ongoing significance. This all matters because customer volume and large direct contracts with carriers traditionally translate into pricing power. San Francisco-based Flexport's volume has been a topic of wide- spread industry speculation and debate, primarily because the com- pany is the most heavily venture Crunching the numbers New analysis disputes Flexport's claims on cargo volumes — but it's complicated By Eric Johnson 0 5000 10000 15000 20000 25000 30000 Maersk Line Yang Ming Line MSC CMA CGM Hapag-Lloyd Zim Integr ated Shipping Services APL Ocean Netw or k Expr ess TEU Flexport's top US import carrier accounts Source: Ocean Audit © 2019 IHS Markit Flexport's minimum quantity commitments (MQCs) for the 2018-2019 contract year Notes: MQCs for Cosco, Evergreen Line, and Yang Ming were not available Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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