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Economy & Business

The Difficult Task Of Moving Freight Forwarding Into The Internet Age


Many of the items we use every day are made overseas. We know that. Now, Sally Helm from our Planet Money podcast brings us the story of how they get here, about big changes in the world of shipping and how a phone call in the middle of the night inspired a technological shift.

SALLY HELM, BYLINE: Ryan Petersen used to make money like this - he and his brother would buy inexpensive stuff in China. They'd have it shipped to the U.S., and they'd sell it on eBay for a higher price. One time, they bought a bunch of mopeds off of a Chinese website, and they paid to ship the mopeds across the ocean. One night, Petersen got a call.

RYAN PETERSEN: I am asleep in my bed at 4 o'clock in the morning. I get a call from China, asking me where such and such document is. I thought that was your job to know where it was, or at least someone. You know, wow, very confusing. And I don't need to be doing that at 4 o'clock in the morning.

HELM: The call was from a freight forwarder. You can think of freight forwarders like travel agents for international shipping. So if you're shipping a bunch of mopeds from China, a freight forwarder will make sure that those mopeds get picked up at the moped factory and taken to a port and put on a ship. And then, a freight forwarder will make sure that the mopeds get on a truck and go to another warehouse. It's a lot of work. Petersen didn't know much about freight forwarding at this point, but he thought there has got to be a better way.

PETERSEN: I just couldn't even imagine. We have the Internet. Like, why is there this piece of paper that's required for me to go pick up the goods? But that's still the default.

HELM: Petersen thought he could build a new kind of company, one that used software to do some of the work that freight forwarders do. But he wasn't sure if anyone would be interested in that, so he decided to test it. He built a mock-up of a website advertising this service, just to see what the response would be. And one day, he checked his email and saw that he had gotten a sign-up from the world's biggest oil company, Saudi Aramco.

So Saudi Aramco, like, signs up for this service and just hears nothing - never hears back from you?

PETERSEN: Yeah, no - never got a word back.

HELM: Petersen wasn't ready to offer this service for real yet, but he says he could tell that he had identified a real problem. Freight forwarders were stuck in this era of faxes and phone calls. So he spent the next couple of years learning everything that he could about freight forwarding as it was. And then he got some funding from some big names, including Google Ventures, and he launched his company, Flexport. They're based in San Francisco, and they use software to automate some parts of the shipping process. So, for example, an employee will get an automatic reminder if they're missing some crucial document. And customers can track their shipments on a central dashboard. Now, Flexport isn't the only company that's trying to bring freight forwarding into the Internet age. I talked to Mike Simon. He's a consultant who's worked in logistics for decades, and he said that, more than ever, big freight-forwarding companies are embracing technology. He said he expects that, eventually, technology will put some people in freight forwarding out of a job, but...

MIKE SIMON: Hasn't happened yet. I mean, the freight-forwarding industry is growing because global commerce continues to grow.

HELM: The new startup, Flexport, is growing, too. They have 700 clients. Founder Ryan Petersen says they expect to make $75 million in revenue in 2016. Petersen will tell you that he's not trying to replace all the people in freight forwarding. Flexport has hundreds of employees in San Francisco, New York, Amsterdam and Hong Kong. I visited the New York office, and I did spot one physical piece of paper, but most of the people there were looking at screens. Sally Helm, NPR News. Transcript provided by NPR, Copyright NPR.