Flexport is undergoing a reorganization of its omnichannel business, integrating its freight forwarding and fulfillment teams as the company aims to push its business further toward profitability.
Due to redundancies as part of the integration, the company will be cutting headcount by roughly 2 percent, a Flexport spokesperson confirmed.
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The reorganization is a “natural next step,” the spokesperson said, 16 months after Flexport acquired Shopify’s logistics business , including the e-commerce fulfillment technology unit Deliverr . That acquisition came in exchange for a 13 percent equity stake in Shopify, bringing the digital freight forwarder’s total ownership to 17 percent.
“We continue to sharpen our focus on larger customers and drive down operating costs, giving us the ability to profitability scale our business and creating value for both our customers and Flexport,” said the spokesperson in a statement. “We have made great progress towards our growth and profitability goals in 2024, and the reorganization will enable our teams to leverage Flexport’s full suite of logistics capabilities to solve customer problems and help them grow.”
CEO Ryan Peterson reiterated in an internal memo to staff that the reorganization sets the firm up for a “successful next few years of profitable growth” and “will increase our velocity in that direction.”
Despite the windfall of money Flexport has raised, reeling in an estimated $2.7 billion in capital including $260 million coming from Shopify to kick off 2024, the Shein partner’s losses are still heavily mounting.
Although Flexport itself doesn’t disclose financial numbers, Shopify incurred a net loss on its Flexport investment of $44 million in each of the previous two reported quarters, tallying $88 million in a six-month span. Results for the most recent quarter are still unknown since the privately held Flexport reports to Shopify on a one-quarter delay.
Shopify has not revealed its stake in Flexport since Sept. 30, 2023, when it was 17 percent. If its share of ownership remained near that ballpark in that two-quarter span, the digital freight forwarder would have tallied up hundreds of millions in estimated losses in the period.
With losses of that magnitude potentially mounting for Flexport, the company has a large ship to turn around if it seeks to regain profitability, which it last generated in 2021.
First reported by The Information, the layoffs are not of the mass scale of the company’s three prior sets of job cuts since January 2023. Although the company was valued at more than $8 billion after a $935 million funding round in February 2022, it ran into trouble in a high interest-rate environment that saw freight demand and volume decline from pandemic-level highs.
The first set of job cuts saw approximately 20 percent of its staff get the axe to kick off 2023, or 640 employees, before letting go another 600 in October. The third reduction in January 2024 impacted roughly 500 workers .
Flexport in general has undergone numerous changes, most notably at the executive level, since Petersen’s return as CEO in September 2023. The founder’s return coincided with the exit of Amazon veteran Dave Clark , who manned the position for a year before stepping down from the role. In the wake of Clark’s departure, numerous other high-profile execs were let go from the company, with Petersen saying he felt the business needed to focus more on customer engagement.
The Information report also said Flexport was subleasing excess warehouse space as part of the fulfillment overhaul, as the company aims to drive down operating costs and spurn more profitable growth.
The company acquired three warehouse leases, including one recently opened in New Jersey, as well as access to a network of 50 third-party operated warehouse locations in the Shopify deal.
In the time since, the freight forwarder has sought to truncate the network. Since-departed SMB and fulfillment services head Parisa Sadrzadeh called the prior larger network “a drain on our profitability” in a June blog post, with the company instead aiming to consolidate its network into five owned-and-operated U.S. hubs in New Jersey, Los Angeles, Atlanta, Chicago and Dallas-Fort Worth.
Internationally, Flexport also has facilities in Amsterdam, Hong Kong, Shanghai and Shenzhen.
Across its facilities, Flexport offers omnichannel services like e-commerce fulfillment, reserve storage and inbound cross-docking.
