Kehlan Kirwan Q&A: Jan van Casteren of Flexport

Kehlan Kirwan meets Jan van Casteren of Flexport, one of the world’s hottest start-ups which has raised €25m in investments. Flexport aims to disrupt the trillion-euro shipping industry involved in freight management.

Kehlan Kirwan Q&A: Jan van Casteren of Flexport

What does Flexport do?

Basically, what we are is a freight forwarder. So what we do for our clients is we freight from the factories, usually in China or Asia, to clients’ warehouses in Europe or the US. We do this by ocean or air.

A travel agency for freight is what you could call it. I think for a lot of our customers making that step to a more data-driven approach is hard, because they are so used to keying in all the different data points that they get, usually through email.

By structuring that data, it has become a huge revelation to a lot of our clients to get instant feedback on what they spend on shipping, how much they ship, which lanes perform well and which don’t. Every day we empower our customers to make better decisions.

So where did it all begin for you?

Well, it begins with our founder Ryan Petersen and he was a long-term importer of goods from China into the US market — all the kinds of things that Americans like to import like TVs or walk-in bathtubs. He realised that importing goods into the US was far more complicated than it needed to be.

He understood that the user experience was broken. It was hard to pin down a freight forwarder who would move his freight, it was hard to get a proper quote and when you did it would be weeks later through a fax. Then when the goods finally started to move, they would suddenly just turn up on his doorstep.

The time between shipment and delivery was a blank, it was very hard to get an idea of where it actually was and if it was on schedule.

When the invoice would come through the door, it was packed full extras and hidden charges which weren’t covered in the original quote. All of this came together to plant the seed for Flexport.

It doesn’t look like the sexiest of industries to disrupt, but it is a global market worth over $1 trillion (€897.75bn)?

Yes, that’s very true. The cost of moving goods around the world is over $1tn and the cost of just making sure that freight moves properly around the world is worth about $300bn to $400bn. That is the market that we’re aiming at right now with Flexport.

It is a super-antiquated business. Technology hasn’t really penetrated it enough to make the impact that it should be having. What we’re trying to do is to bring that technology to that industry to allow our clients to get a much better experience.

We structure all data which surrounds shipments, be it commercial invoices or shipping papers, then we give that data back to our customers. By making that data more accessible to our customers, it enables them to make much better decisions. The knock-on effect is to better control their supply chain.

Ultimately, this helps to lower costs and get an understanding of streamlining their operations.

It’s such a huge problem within the market, access to clean usable data. I would say that it’s such a huge problem that that is the reason why no one has taken it on like us before.

The industry ignored those big and hard problems, simply because they were big and hard. We are of the persuasion that all the easy problems, in terms of technology, are more or less solved.

It’s the big hard problems that need to be solved now. So I think we are going after it because it is a hard problem to solve.

How are you different to others in the market?

I think we’re very much looking to have a data-driven approach to what we’re doing. By structuring all the data from beginning to end.

This means that our clients are able to see the complete picture of how their operations work or can work more efficiently. We’re not looking to give you pieces of data, we want you to have all the data.

Having all the information rather than what a freight company hands you is the key to keeping our clients informed, thus making decisions that can save them time and money.

Scaling into an industry of that size takes money?

Yes, that’s right, so basically we’ve raised $28m (€25m) in seed and Series A funding. This capital will be used mainly for the hiring of engineers and their salaries.

We will also be putting that into the platform itself and constantly updating it to the needs of our customers. It has been an essential round of investment that will allow us to keep driving on to goals over the next few years.

You have to look at where we are at the moment too. We are not just building the platform, we actually have big clients, and growing faster every month. We have over 600 clients and are growing 25% in revenue month on month. We’ve shown that what we’re doing resonates with customers, and it’s a proposition that they have been waiting years to get.

What is the future for Flexport?

We started as a US-based company, starting up in San Francisco. What you see now is that we’ve expanded to New York, we’ve opened up an office here in Amsterdam to cover the European market and we’ve opened an office up in Shanghai, which would be the origin place for most trades.

So in the mid-term, I think we will expand more geographically. I think in the long term our aim is to be the operating system for global trade.

Now that may seem like we’re boasting, but we have a vision for what we want our platform to be. We want to enable any two partners anywhere around the world to engage in a trade to move goods. We are also driven by our conviction that global trade has been a big influence for global wealth.

Global trade over the past decade has pushed billions of people around the world out of poverty. Like any business, ours starts with our customers and their success.

That is what allows us to drive sales and drive growth. We’re not just a technology platform, our company is being run by real people. Every shipment has a team of experts connected to it who can help and provide information at any time. You can’t run all of it just on software.

The software is a great tool and a great aid to help you perform better, but in the end, you’ll still need people solving the problems.

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