In bombshell memo, Flexport tells staff 20% of its workforce will be laid off via email

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Staff at supply chain management platform Flexport yesterday received a bombshell memo containing the announcement that a whopping 20% of the company's global workforce will be made redundant.

In bombshell memo, Flexport tells staff 20% of its workforce will be laid off via email
Photo credit: Aero Icarus / Flickr / CC BY-NC-SA 2.0

The news was confirmed on Flexport’s official website yesterday, where the memo sent to employees was shared.

In the notice, despite the significant amount of layoffs being announced, co-CEOs Ryan Petersen and Dave Clark said that Flexport was starting the New Year “with more optimism than ever”.

The CEOs then went on to say that Flexport was “not immune to the macroeconomic downturn that has impacted businesses around the world”.

“Our customers have been impacted by these challenging conditions, resulting in a reduction to our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company,” wrote Petersen and Clark.

The duo added that 20% of Flexport’s staff would be notified of their redundancy in an email sent just a few hours after the memo.

The bombshell news has sparked widespread discussion among supply chain professionals regarding the numerous tech startups who have growth rapidly in the supply chain space in recent years.

This is particularly true on LinkedIn, where scrutiny of Flexport has not been in short supply.

Commenting on the news via LinkedIn, Philip Damas, Managing Director at Drewry Shipping Consultants Ltd, said:

“Interesting to read news of Flexport’s decision to trim 20% of their headcount. Founded 10 years ago as an industry “disruptor”, it would seem a number of technology revolutionaries who entered the container shipping industry have similarly struggled to challenge the market leaders like K+N and DHL. Of course technology will continue to disrupt, but established players have also been adept at improving their own systems and processes. Perhaps the lesson here is for commercial success in such a complex and multi-faceted market, the technology is only as strong as the people and the processes and data that complement it.”

In reply to Damas’s post Pieter Kinds, CEO of Freightender, didn’t hold back, adding:

“I find it rather repulsive how VC’s and their puppet start-ups throw around other peoples’ money and upend the life of their employees at the drop of a hat.”

Nick Coverdale, founder of logistics tech firm Utanga Technologies, also weighed in on Flexport’s strategy and its announcement on redundancies.

Writing on LinkedIn yesterday, Coverdale said he was “disappointed by the lack of tech advancement over the last 10 years” before adding that he had come to the realization that “Flexport, Project 44 and others are not here to advance tech in the supply chain but use the logistic industry as vehicle to get an IPO.”

Robert Garrison, CEO of Mercado and ex-FedEx and UPS, was another to offer his insights on LinkedIn concerning the digital forwarding space.

In the conclusion of his post, Garrison said:

“Despite their great margins in 2021, forwarding has historically been a low margin, brutally competitive business. There are 3,000 OTIs in the US alone, and some of the biggest brands in the world compete in this space including Amazon, FedEx, UPS, and DHL. Given this, it’s tough for me to envision how FP is going to ‘change the game’ without significant advances in either technology, or by entering into the supply chain space.”

There were nonetheless some commentators who cut Flexport a little more slack. One was Pete Mento, who was CH Robinson’s Vice President of Global Customs for over 5 years, and is currently Senior Vice President for Compliance at 3PL platform provider Traffic Tech.

Writing on LinkedIn, he had the following to say regarding Flexport’s announcement, while also using the opportunity to reach out to the staff who have been made redundant:

“This kind of news will probably be common for rest of the year as firms who had to over hire to deal with logistics challenges through the #covid19 crisis, regrettably, reduce their staff. I know a lot of fantastic people at Flexport. If you have open rolls – let them know. We are hiring, especially for sales. If you have been impacted, let me know.”

Flexport’s memo, in full, can be read below.


Team,

We begin the New Year with more optimism than ever about Flexport’s future. There is a lot to be proud of — together as a team, we have made significant strides to streamline our operations and strengthen our commitment to build the best technology and products for the benefit of current and future customers.

While we are looking forward to what’s to come in 2023, we must also make hard decisions necessary to set us up for long-term success. We are overall in a good position, but are not immune to the macroeconomic downturn that has impacted businesses around the world. Our customers have been impacted by these challenging conditions, resulting in a reduction to our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company.

As a result, today we are reducing the size of our organization and we will unfortunately say goodbye to a group of talented Flexporters. We are grateful for the contributions of those who are leaving, and each departing Flexporter has our gratitude for their contributions to the company. They will be treated with respect and dignity as their Flexport chapter comes to a close and we wish them great success in their future endeavors.

Supporting Departing Flexporters

Every Flexporter whose role is being eliminated will be notified by email with information specific to them and their exit. In the US, Canada, and Europe these notifications will be received in the next few hours. In APAC, local HR teams will reach out to those impacted in the next full working day (Jan 12). Impacted employees account for approximately 20% of our global workforce.

Departure support will vary by geography. For US employees it includes 12 weeks severance, 6 months extended healthcare, 2022 bonus payment, equity vesting acceleration including dropping the vesting cliff for those with 6 months or more of tenure, immigration support, and ability to opt into our alumni talent directory to help with future job opportunities.

The Road Ahead for Flexport

At Flexport, 2023 is going to bring extraordinary velocity – we are in the process of doubling our software engineering talent and moving to single threaded business organizations to build world class products faster, and we will continue to invest in delivering best-in-class operational execution for our customers.

The current slowdown in volume gives us time to focus on building our technology bench while the economy lags. Then, as the economy recovers, we will be ready to be the Flexport that we all want to be–the one stop for customers to make the movement of goods around the world easy. But to do that, we’re going to need to be nimble, fiscally responsible and focused on building fast with operational excellence.

We will come out of this economic downturn fit and up for any fight – to be our best and continue delivering amazing value and service for customers.

Dave and Ryan


Photo credit: Aero Icarus / Flickr / CC BY-NC-SA 2.0

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