Flexport Hopes 2025

Flexport’s road to profitability is a longer one than expected, but its founder is optimistic 2025 is the year the freight forwarder pushes through.

Ryan Petersen, founder and CEO of Flexport, told the Wall Street Journal that the company missed its profitability target at the end of 2024 due to weaker-than-expected demand for its e-commerce fulfillment and distribution services.

“We came up short,” Petersen said, who also told the publication that an initial public offering wouldn’t be entertained until after the year was over. But he expects Flexport to be “quite profitable” by the end of 2025.

The Wall Street Journal article hinted at Floxport hiring more employees overseas with Petersen saying he plans to add hundreds of workers in Southeast Asia and in Latin America, where importers are increasingly shifting their supply chains as they seek alternatives to China.

Petersen did not indicate what positions would be hired, but the move appears to mimic the thought process of DHL, which said it could hire 200 more international workers in countries like Malaysia to help process a potential increase in shipments through its network if the U.S. suspended the de minimis provision.

The turning tides in global trade, including tariffs levied by the Trump administration and the future of de minimis, among other geopolitical uncertainties, appear to be giving Flexport new life.

Although demand for e-commerce fulfillment and distribution services was not up to snuff for much of 2024, policy changes in Mexico that abruptly restricted tax-free textile imports into the country accelerated business for those segments within Flexport. The restriction prompted apparel brands to move their goods from fulfillment centers in Mexico to U.S. warehouses.

On a podcast earlier this month, Petersen said the logistics firm doubled the revenue of its e-commerce fulfillment segment in the first 60 days of the year as shippers sought assistance after the import restriction.

The solid top-line start to 2025 continues on the wider revenue momentum built throughout 2024. The founder said the company generated revenue last year of $2.1 billion, up more than 30 percent from the $1.6 billion brought in throughout 2023.

While Flexport is a private company and doesn’t share earnings results, a peek into minority shareholder Shopify’s own balance sheet gives some insight into the digital freight forwarder’s quarterly profit performance.

According to a February filing with the Securities and Exchange Commission (SEC), Shopify took a $22 million net loss on its Flexport investment in the fourth quarter, resulting in a net loss of $138 million throughout 2024.

Shopify’s results are reported on a one-quarter delay due to the timing of financial information availability from Flexport, the e-commerce giant says, which means the loss came in Flexport’s July-through September quarter.

The good news for Flexport is losses narrowed throughout the year, seemingly supporting Petersen’s goals for 2025. Shopify took $44 million in losses in each of the first two quarters, before the losses tapered to $28 million in the third quarter.

The bad news is that valuation remains in decline. Shopify’s total investment in Flexport is $642 million as of Dec. 31, 2024, down from the $664 million it had invested in the company three months earlier, and well off the $838 million tallied as of June 30, 2023.

When accounting for the 17 percent stake Shopify had in Flexport as of Sept. 30, 2023, the logistics company is valued at roughly $3.8 billion, less than half of the $8 billion valuation upon securing $935 million funding in February 2022.

The rebound in fulfillment demand could go a long way to sending this valuation back on the upswing.

The company said its busiest warehouse in San Bernardino, Calif., is nearly 75 percent full, up from less than half full in December. Petersen told the Wall Street Journal that Flexport is considering adding robotic systems and mezzanines within its warehouses to create more space ahead of the peak season at the end of the year.

That warehouse is one of five Flexport now operates in the U.S. alongside physical spaces in Atlanta, Dallas, Chicago and New Jersey.

Flexport acquired three of those warehouses and gained access to a network of 50 third-party operated warehouses when it acquired Shopify’s logistics business, including the e-commerce fulfillment technology unit Deliverr. But the firm consolidated its fulfillment operation significantly, scrapping the third parties as part of the wider efforts to enhance profitability.