Expedock Webinar Series #2
King: Hey everyone. It's King from Expedock. In today's webinar we're learning how to scale post-COVID with technology. Our guest speaker is Brian Li who has held numerous positions all the way from operations to growth and strategy at the world's biggest freight forwarder Flexport. Now Brian thanks for joining us. Can you tell us a bit about what you've done and what you do?
Brian Li (Flexport): I used to do a lot of the work in operations, a lot of documents figuring out how the logistics of a shipment worked end-to-end and then an opportunity opened up in growth in top of funnel and then really focusing on how we expand our business. That's what I'm here to talk to you right now especially during this COVID period and figuring out how we navigate trade when we don't really know what the future holds. That's been a real big challenge not just at Flexport but pretty much in every single freight forwarder right now just trying to navigate through this time.
Pretty much there have been a couple of noteworthy market conditions. The biggest thing to note is that both the carrier and ocean markets are continually facing these big capacity constraints. When you look at the air market even though trade is come back online, really like passenger air freight hasn't expanded. Passenger air freight hasn't expanded, passenger flights generally account for around 50% of the capacity of freight. Therefore the capacity is very dim. Secondly, Apple announced that they would or there are leaks that there would be an iPhone 12 released. The interesting thing about that is that whenever Apple comes out with an iPhone, the air market naturally contracts in terms of the capacity that we have.
Therefore air is going to be extremely intense and hard to get space. The same is true for ocean. In response to COVID a lot of ocean carriers just tried to issue blank sailings to artificially sort of constraints apply. As a result they have been relatively slow in catching back up to demand. Whereas on the demand side, on the company side a lot of companies are trying to ramp back up and due to this pent-up demand, they're actually struggling to be procure space and a lot of different investor calls, for example, if you listen to Walmart, if you listen to Target, they're actually really worried about not being able to get enough inventory available for peak season.
Therefore really as forwarders, the question that we need to answer is how do we best service our customers in this time? It's definitely like how do we get them space. That's question number one. What can we do as forwarders in this environment? There's a couple of things we can do. The first thing is that the operations is just table stakes. You got to get that right. Obviously, you make mistakes. That's not a great look. The second is that bookings are super important to do in advance and to really get right and really in planning your allocation strategy.
Depending on what your allocation strategy looks like that's going to have a real tangible impact on what's your customers look like on whether or not they're able to get space and ultimately whether or not there'll be able to realize this cash investment that they're putting forward. We still don't know what the future of global trade looks like, that's an ever important question. Really the most important thing we can do is really save and continue to practice the financial discipline that led you through the first part of COVID.
We're experiencing this glut, we're seeing like a lot of demand come back online. What we don't know for sure is whether or not there's going to be more waves that'll lead to different places shutting down. For example, there are parts in China that are shutting down again due to the second wave of COVID. What is the future of freight forward and what is like the near-term future. The near-term future is that like there is an open question of how we utilize technology to best service our customers. At Flexport we work very hard on how we can better the client experience, how we can really make sure that you get all your data seamlessly, for example.
Secondly like we need to really make sure that the pipes of our operations are also as technologically driven as possible. That's generally not an easy order for a freight forwarder. Do you just do cold Turkey? It does require some investment. That said now there's like a glut of companies helping to solve this problem. I think that Expedock is one of the great companies that are doing that.
I would most certainly look into something like that because as I said before getting the operations right is table stakes. Really now the question that should be on your mind, that should be on salespeople's mind is how do we best serve customers in this moment? How do we best ensure that they get the space such that their customers can get their goods in a timely manner. That's really the question that we're trying to answer here.
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