After scanning the highlights of Neel Jones Shah’s CV – vice president of sales and marketing for United; chief cargo officer at Delta; a seat on Amerijet’s board – one would hardly consider him a driving force behind the reinvention of freight forwarding. However, in the last 10 months of 2017, this career cargo carrier executive has made a radical shift in course, joining Flexport, one of the most dynamic and high-tech full-service forwarders in the United States.
“I’m an airline guy,” Shah admitted. “That’s how I grew up and was almost bred.” But he also had a great appreciation for the way that freight forwarding worked, and was also “frustrated, at times, with the relationship we had. It was often adversarial. There were threats levied on both sides – it just seemed like a dysfunctional way about doing business. I was sure there was a better model.”
At Flexport, based in the Bay Area since 2013, Shah said he found that better model after meeting Flexport CEO Ryan Peterson. “First and foremost, they were building it with 21st century technology,” Shah said. “For crying out loud, we are stuck in the Dark Ages overall! Things still move using paper and fax machines and – if you’re lucky – e-mails.” Many forwarders, he lamented, “don’t want to evolve because that would mean losing your job, or potentially losing control.”
For most of its four years in business, Flexport has focused on seafreight. But now that it has managed to raise a war chest of more than US$200 million in venture funding, the young company has its sights set on the booming air sector, especially in 2018. That’s where Shah comes in, and one of the reason’s he’s on Air Cargo World’s watch list.
As Flexport’s senior vice president and global head of airfreight since February 2017, Shah has been tapped for his extensive carrier experience. “I’m charged with building out our airfreight capabilities, end-to-end, on a global basis,” he explained. The strategy at Flexport, he said, is to encourage flexibility, “so that we can interact with our clients the way that they want to interact with us.” Flexport, also offers applications that are customized to the role each client plays in the supply chain. “The idea is, if you get real-time information and input it into the same system,” he said, “you can think about how much more transparent you’re making the supply chain.”
By embracing technology, Flexport has automated a lot of the time-consuming functions, like locating shipments in the supply chain. “We’re leveraging technology in order to get a leg up on the business and automating as much as we possibly can,” he said. “Then we can spend our money on what truly matters to the customer.”
Shah also says the old days of controlling customer relationships are gone. “I am happy to have an airline have a direct relationship with a shipper,” he said. “The supply chain is a heck of a lot more complicated than just airport to airport. If all the customer wants me to do is manage that complexity from end to end, I’ll get paid fairly to do that.”
Shah added that Flexport makes money not by creating arbitrage opportunities, but be creating good software that makes customers come back for more. Progress has been slow, Shah said, but it’s gaining momentum. “If we look back eight months ago, zero of our truckers used our applications,” he said. “Now, compliance rates are in the high 80s/low 90s, and I’m sure that will get close to 100 percent over the next several months.”
Shah said Flexport will likely grow its total revenues roughly 2.5 to 3 times its current amount in 2018. Seafreight still accounts for about 65 percent of these revenues, with air contributing most of the remainder. But after the growth that the company has planned for next year, Shah said the revenue ratio may be closer to 45 percent air and 55 percent ocean.
“Air is very complicated, but it’s catching up,” he said. “We’ll be signing multiple block space agreements next year in places like Hong Kong, Shanghai, Vietnam and Taiwan, probably amounting to a couple thousand tonnes a month. We’re going to be really stepping up our game on the air side.”
For 2018, Shah said Flexport will continue to build out its platform, expand air capacity, hire more people and open more sales facilities. “We’re now just shy of a billion-dollar market valuation,” he added. “With every leap that we make, it becomes harder for the competition to follow.”