Flexport is undergoing another reshuffle at the top, with former Amazon logistics executive Dave Clark departing, replaced at least for now by once-again CEO and founder Ryan Peterson in a shakeup pointing to a reset to the company’s core freight focus and a pullback from its aggressive growth plans.
But industry observers wonder how Flexport will fare in that regard, as freight volumes and rates fall in tandem globally. According to the Bureau of Transportation Statistics, total transborder freight by all modes was down 4.6% in June to $134.8 billion.
Flexport was valued at $8 billion after a $935 million round in February 2022, a valuation many believe has fallen significantly. Peterson said in a post on X that “important changes are needed to sustain our growth and return to profitability.” He also alluded to a new self-serve SMB product launching next week, and “a new suite of enterprise offerings in Q1.”
While both Clark and Peterson say it was a mutual parting of the ways, FreightWaves reports that Clark was fired by Flexport’s board. Under Clark’s brief tenure begun in June 2022, the company did significant hiring and purchased Deliverr and its ecommerce fulfillment assets from Shopify. This year, there have been 500+ layoffs as headwinds buffet the company.
“Founders have a right to change their mind,” said Clark, reportedly mulling a run for governor of Texas, in a farewell post shared on X. “I came to Flexport to do big things and that’s where I believe we were headed. Today, Ryan and I discussed his desire to return to focusing on growth in the core freight business. In light of that, I feel that he is best suited to lead the company in that direction.”
Tammy Tippins, director of professional services for Intelligent Audit, said generally that global freight forwarders who are struggling today didn’t diversify fast enough during the covid heyday.
“They invested in executive leadership and sales staff like freight volumes were going to grow by double digits in perpetuity, and the capacity imbalance would last forever,” Tippins said. “Now that reality has asserted itself, forwarders are quickly realizing that what makes money is the efficient movement of freight.”
For them, she said, there will be a painful adjustment to get back to a proper scale and expense ratio sized for today’s market.
Rob Martinez, founder and president of Shipware, said Clark’s departure was not surprising, given growth that has rolled backwards under his brief tenure, adding “freight and software businesses are vastly different.”
“I do know that Flexport laid off 640 employees in January,” Martinez said. “My guess is that the ship wasn’t righted with Clark solely in the CEO role. The question is, does Petersen step back in to run it, or does he appoint a new CEO? My guess is Ryan steps back in.”
“Dave Clark leaving isn’t a surprise and it’s irrelevant if he was given the choice of resign or be fired,” said Brittain Ladd, a strategy advisor with Shatranj Capital Partners. “What’s important to focus on us is that Flexport is in far worse shape now than when Dave took over. Flexport foolishly acquired Shopify’s assets, including Deliverr, with the intent of being Shopify’s fulfillment partner while also laying the foundation to become a competitor to Amazon.”
As for the refocus on freight, Ladd cited the continued falloff in that market, adding, “How is Flexport supposed to grow and be profitable in such an environment?”