The Supreme Court just heard arguments in the broker liability case we’ve been tracking. Plus: oil shipping costs explode, trucking insurance is stuck in 1980, regulators brace for a carrier crackdown, and more.
Optimize freight broker operations by fixing payment workflows in Q1. Streamline carrier pay before capacity shifts compress your margins.
Tucker Carlson’s nicotine brand loses 378,000 tins in a cargo theft. Plus: produce rates reset, diesel climbs, and a bill that could pull hundreds of thousands of drivers off the road.
Valued at $8 billion in February 2022 (for comparison, CH Robinson's market cap was at $10 billion), they have been on the receiving end of both criticism and praise.
Good Monday morning. Today's feature spotlights the origins and rapid trajectory of logistics giant Flexport, a story of innovation and challenge. Also, we explore rising container freight rates and their impact on U.S. inflation, Matt Silver is out of stealth mode, and the sentencing of a former Roadrunner trucker in a wire fraud case. Plus, a truck spilled a truckload of thesaurus in New York.
In today's email:
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🐔 WHAT’S COOKIN’ IN FREIGHT
📈 Freight Rates Foreshadow Inflation Spike. As 2024 unfolds, a stark increase in container freight rates is visible, hinting at a rise in U.S. goods inflation that could upend economic predictions. Analyst Andreas Steno from Steno Research suggests this climb in shipping costs may signal higher inflation, putting the spotlight on the Federal Reserve's response. The Suez Canal's ongoing difficulties further exacerbate inflationary prospects. This situation echoes the pandemic era when freight costs soared by 600%, with a notable impact on consumer prices. Still, the data prompted a divided social media response on the implications.
👨💻 Matt Silver Out of Stealth. Matt Silver announced the launch of Cargado, a new venture emerging from stealth with a $3 million funding round with Craig Fuller & Sahil Bloom joining as investors. Cargado aims to innovate in the cross-border Mexico freight sector, a field Silver has been involved in for nearly a decade, including founding Coyote's Mexico business and leading Forager. The company plans to address the challenges in U.S.-Mexico logistics, which are expected to grow significantly due to nearshoring trends and increasing U.S.-Mexico trade. The technological solutions proposed by Cargado are designed to manage and support the complexities of cross-border operations. The team includes technical co-founder Rylan Hawkins, formerly of Convoy, and engineers from Convoy.
👨⚖️ Trucker Sentenced in $112K Wire Fraud Scheme. Johnny Bradford II, a 52-year-old ex-Roadrunner trucker, has been sentenced to six months of house arrest and three years of supervised release by a Nebraska federal court. Convicted of wire fraud, Bradford, alongside his co-defendant, is also ordered to pay $112,000 in restitution. The sentence comes lighter than usual, recognizing Bradford's secondary role in the 16-month conspiracy with co-worker Amy Shepherd, who faces prison time.
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Flexport, a digital freight forwarder, has built a prominent name over the last decade. Valued at $8 billion in February 2022 (for comparison, CH Robinson's market cap was at $10 billion), they have been on the receiving end of both criticism and praise. Here's a look at their founding, history, and their latest raise of $260 million on an uncapped convertible note (where their next financial raise will dictate this raise's valuation).
Peterson's foresight led to creating a software-centric platform, transforming how goods are transported across borders, thereby setting Flexport apart early on in its venture.
Since its inception, Flexport has attracted significant funding. The company has raised substantial capital through multiple financing rounds, featuring prominent investors.
Flexport has raised substantial funding over several rounds, with notable increases in valuation.
While these capital injections have fueled its growth and expansion, Flexport's valuation has also been a point of contention. Critics argue that the high valuation may not accurately reflect the company's actual market position, suggesting a potential discrepancy between perceived and real value. Supply Chain Expert Brittain Ladd estimates their true value is closer to $2 billion.
"I've stated from the beginning that Flexport is an incredibly limited company. You read it here first: If Flexport can't retain their talent, or raise much needed capital, the company will go out of business in 12 to 18 months. Yes, Flexport claims to have $1B cash in the bank. That will run out faster than people think. Ryan Petersen is about to face a Sisyphean task to keep Flexport operating. I don’t see how Flexport can survive unless they’re acquired." - Brittain Ladd, Supply Chain Expert
Others say that there isn't anything truly unique about Flexport.
Petersen has expressed his determination to silence his critics and prove the company's capabilities. "If we can fix problems for Flexport, we can fix problems for the wider world," he asserts.
Here's an opposing view from FreightCaviar's Co-Founder, Krystian Gebis:
One way to look at Flexport's future potential is through the lens of Shopify's growth. Shopify divested its entire logistics division and put it into the hands of Flexport. Shopify's growth is now directly impacting Flexport's growth, and given that Shopify's business is only booming it's hard to think that Flexport has a limited future. That's like saying even if Amazon is going to do more sales, they won't need to scale their logistics network to support that growth. So, just look at it as Amazon investing in their in-house logistics network.
Flexport's executive landscape experienced notable turbulence with the ousting of Dave Clark, who served as the CEO for barely a year. This unexpected exit led to Ryan Petersen resuming the CEO role, saying Clark neglected customers and lacked spending discipline.
Surrounding the departure of Clark was a series of executive terminations, more layoffs, and rescinded offers.
Adriana Pulley
TOGETHER WITH RELIANCE PARTNERS
Borderless Coverage powered by Reliance Partners launches the Mexico Cargo Hijacking Data Portal to tackle the high risk of cargo hijackings in Mexico. Providing in-depth analysis, the portal reveals a significant increase in hijackings, particularly in central and southern regions, and underscores the need for enhanced security measures. This tool is vital for businesses to strategize safer operations and navigate Mexico's challenging logistics landscape. Read more about the data portal here, then get in touch with Reliance Partners today at 877.668.1704.
AROUND THE FREIGHT WEB
📚 Thesaurus Spill. A truck spill in New York caused a lexical explosion, with thousands of Roget's Thesauruses covering the streets, leaving witnesses overwhelmed with words.
🔍 Logistics Legal Battle. The Illinois Supreme Court is set to review the defamation case between logistics giants project44 and FourKites, involving accusations of financial misconduct and ties to organized crime.
🚨 Tramadol Seizure. U.S. Customs and Border Protection officers seized 160 pounds of tramadol, an opioid analgesic, from a trailer at the World Trade Bridge.
🚁 Drone Delivery Expansion. DJI, facing U.S. scrutiny and a federal ban, launches global sales of its FlyCart 30 delivery drone, marking a significant step into the drone delivery market.
🔋 Nikola Warning. Despite a second Nasdaq delisting warning, Nikola Corp. remains undeterred, focusing on company performance and customer satisfaction over stock price concerns.
📉 Canadian Market Softens. The Canadian spot market ended 2023 on a soft note, with declining freight activity and truck postings, signaling a cooling period for cross-border loads to the U.S.
FREIGHT CONFERENCES WE'RE ATTENDING
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FREIGHT MEME OF THE DAY
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