The Information reported on Friday, citing people familiar with the matter, that the US logistics startup Flexport is planning to lay off about 20% of its Workforce in the coming weeks. The company did not immediately respond to a Reuters request for comment. Flexport, which provides freight forwarding and brokerage services, raised $2.3 billion in venture funding and had a valuation of $8 billion at its last round of financing.
The company is reportedly cutting staff amid a slowdown in technology demand, making it easier for businesses to manage global supply chains. This move comes on the heels of a tough few months for the freight industry, as a global economic slowdown causes businesses to defer spending on shipping goods from China to Europe and the United States.
Co-CEOs Ryan Petersen and Dave Clark told employees yesterday that they are optimistic about the company’s future but that Flexport is not immune to the “broader macroeconomic challenges” facing businesses worldwide. “We expect that these broader trends will impact the demand for our services,” they said, adding that they are working hard to optimize their operations and improve efficiency.
Several senior executives hired by Clark — who had worked at Amazon for 23 years and built its logistics unit into a massive juggernaut — are leaving the company, according to one person familiar with the situation. The person who asked not to be identified discussing internal company matters said some clashed with Flexport’s entrepreneurial culture and focus on prioritizing customer relationships.
The source added that some of the executives were fired, while others are being laid off. The departures of top staff follow a series of executive changes at the company since Clark was ousted in September following a CEO change. Ryan Petersen returned as Flexport’s CEO and said he wanted to focus on growth while maintaining profitability.
The co-CEOs also praised recent investments in the company, including a $260 million investment from e-commerce giant Shopify. The firm has been working to expand its logistics services into e-commerce fulfillment and last-mile delivery. In June, the company acquired Shopify’s logistics arm, and as part of that deal, Shopify received a 13% equity stake in Flexport.
In addition to the new funding from Shopify, Flexport also received a $260 million investment last year from SoftBank Group Corp. The Japanese conglomerate has previously led investments in Uber and Nuro, an autonomous delivery robot maker. SoftBank declined to comment on the rumors of a new investment in Flexport.