According to the WSJ’s sources, Flexport intends to cut almost 20% of its workforce, which equates to around 500 employees. This would represent the second round of layoffs in a short period, as the company cut 20% of its workforce in October, focusing on areas such as software development.
The latest round of job cuts is part of Flexport’s broader strategy to shore up its financial stability and return to profitability. The company has been navigating substantial changes since the return of founder Ryan Petersen as the Chief Executive Officer in September. Petersen assumed the role after a clash with Dave Clark, a former senior executive at Amazon, regarding the company’s direction and spending on new operations.
The freight forwarder has been adversely affected by a decline in freight rates, operating as an intermediary by purchasing space on container ships from shipping lines. The profit model relies on charging customers rates higher than the list prices from shipping lines.
Flexport recently secured a $260 million investment from e-commerce services provider Shopify, as reported by WSJ. This capital infusion follows a series of changes within the company, including acquisitions and expansions into new areas. Despite facing financial challenges, Flexport aims to return to profitability by the end of 2024, according to statements from CEO Ryan Petersen.
The Wall Street Journal points out that the company’s recent expansions and acquisitions, such as its purchase of technology from collapsed digital freight business Convoy and Shopify’s logistics assets, have not shielded it from financial difficulties caused by falling shipping demand.