Flexport plans to cut 20% of workforce as global shipping demand slows

Flexport, a fast-growing tech-enabled freight forwarder backed by big venture capital firms, announced on Wednesday that it will lay off about 700 employees, 20% of its global workforce, because of the slowdown in global trade.

The San Francisco-based logistics company said more automated systems and lower shipping volumes mean it has more employees than it needs.

The news follows job cuts in recent months in the logistics and technology sectors.

“As we look forward to what is to come in 2023, we must also make tough decisions necessary to prepare for long-term success. We are in a good position overall, but not immune to the macroeconomic downturn that has hit companies around the world,” co-CEOs Dave Clark and Ryan Petersen wrote in a memo posted on the company’s website. “Our customers have been impacted by these challenging conditions, which has resulted in a reduction in our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, mean we are overstaffed in a variety of roles across the company.”

Flexport said it will provide severance packages that include 12 weeks’ pay, six months of extended healthcare, a bonus payment and accelerated exercise of the employee stock option plan for US employees.

The big layoff comes four months after Amazon’s (NASDAQ:AMZN) Dave Clark joined the company and hired about 400 IT engineers and top executives to expand its digital platform. Last week, Flexport hired former Microsoft and Amazon executive Teresa Carlson as chief commercial officer. Clark will take over as solo CEO on March 1.

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“At Flexport, 2023 will bring exceptional velocity – we’re doubling our software engineering talent and moving to single-threaded enterprise organizations to build world-class products faster, and we’ll continue to invest in delivering best-in invest in world-class operational execution for our clients,” the executives said in the memo.

“The current volume slowdown gives us time to focus on building our technology bank while the economy lags behind. Then, when the economy recovers, we will be ready to be the Flexport we all want to be – the one-stop shop for customers to simplify the movement of goods around the world. “But to do that, we need to be agile, financially responsible and focused on building fast with operational excellence.”

CH Robinson, the largest truck broker in the US and major international trucking company, announced last quarter that it was laying off 650 employees. Amazon recently confirmed it was cutting 18,000 jobs, and Salesforce, the provider of cloud-based customer relationship management tools, said it would cut 10% of its workforce.

Click here to read more reports on FreightWaves/American Shipper by Eric Kulisch.

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