A week after reports surfaced that Flexport would undergo another round of layoffs, returning CEO Ryan Petersen confirmed the job cuts.
In a note to employees Thursday, Petersen said the digital freight forwarder was cutting about 20 percent of staff starting Friday, or roughly 600 of the company’s 3,300 workers. This is less than the initial numbers reported by The Information, which pegged the cuts at 30 percent.
The layoffs came nine months after the company cut 20 percent of its global workforce, and a month after Petersen’s then-successor, CEO Dave Clark, abruptly left the freight tech firm due to disagreements on Flexport’s direction.
Flexport declined to comment on the layoffs.
Rick Watson, CEO and founder of RMW Commerce Consulting, said it wouldn’t be surprising if many of the layoffs were part of the Deliverr fulfillment technology Flexport recently acquired from Shopify, or affected people hired under Clark. Several execs that followed Clark from Amazon to Flexport, including president and chief commercial officer Teresa Carlson, left the company after his departure.
When Clark left, Watson previously told Sourcing Journal that he believed the $8 billion company was overvalued. After the layoffs, he believes Flexport has a tough turnaround ahead.
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“It’s difficult to see how Flexport will be able to: conquer a low-margin freight shipping business, stay laser-focused on being a capital lender and be a fantastic North American virtual logistics network for its partner Shopify, all while navigating a lower inventory, high interest rate environment,” Watson said.
The cuts are part of Petersen’s goal to get Flexport back to profitability, and build on the $1 billion it holds in net cash, the founder wrote in the note. The layoffs give the company wiggle room to become profitable without raising prices, Petersen said.
A report from The Information in September said that Flexport’s revenue fell a whopping 70 percent in the first half of 2023 to nearly $700 million amid lower-than-expected volumes and collapsing freight rates.
“We are confident that this reduction in force will not impact the customer experience we provide to our customers today,” Petersen said in the note. “I’ve spoken to more than 100 of our top customers in my first month back as CEO, and hope to talk to hundreds more in the months to come. It’s clear that our customers want us to be a profitable company they can rely on to solve important problems in their supply chain.”
Petersen has routinely discussed the importance of prioritizing customers since he returned as CEO. He has publicly stated in interviews that the freight forwarder had lost its focus on customer service.
In the note posted on Flexport’s website, Petersen said the company would renew its focus on measurements tied directly to the quality of the customer experience, including on-time execution, quote to invoice accuracy, shipment milestone accuracy, direct customer feedback and net promoter scores.
Although Petersen has called for the company to return to its core freight business, he emphasized that the layoffs do not change Flexport’s long-term technology vision.
“We see endless opportunities for technology to improve on-time performance and reliability, upgrade compliance processes, and save businesses money in their global supply chain,” Petersen said. “We are the technology leader in this space and will continue to accelerate. With a flatter organizational structure, our talented tech teams will be able to make quicker decisions and deliver technology across as many customers and use cases as possible.”
Last month, Flexport announced both an end-to-end supply chain platform for SMBs called Revolution, as well as a $149 per month membership program, Flexport+. Revolution, which Petersen has called “TurboTax for importing and selling goods,” released on the same day as a similar offering from Amazon called Supply Chain by Amazon.
U.S. employees impacted by the layoffs will get nine weeks of severance pay, two months of extended healthcare through the end of the year and immigration support.
Exit support for laid off Flexport workers will vary by geography. Employees who are impacted and located outside of the U.S. would get more information about their support and separation packages when notified of their termination.
Flexport has recruiters helping departing employees find a new job. According to Petersen, they will work with more than 300 companies to match potential job opportunities with impacted employees.