Flexport approaches rival forwarders for customs help

Flexport approaches rival forwarders for customs help

An email sent by Flexport to an unknown number of rival forwarders said it was seeking a customs broker to partner with to help process its “high volume” of customs filings. Photo credit: Shutterstock.com.

Flexport has reached out to rival forwarders to gauge their interest in helping Flexport deal with increased demand for customs services as shippers grapple with the uncertainty around tariffs on United States imports, JOC.com has learned.

The San Francisco-based forwarder confirmed the move to JOC.com, saying the inquiries to its rivals are more exploratory than definitive at this point as it looks to cope with an influx of demand, particularly on its core China-US trade lane.

“Given the trade war, customs is one of the areas [in which] shippers need the most help right now,” a Flexport spokesperson told JOC.com. “We've been exploring whether having partners support us on US customs through the Flexport platform would make sense, but no decisions or moves [have been made] so far.”

An email sent by Flexport to an unknown number of forwarders said the company was “looking for support in processing our high volume of customs filings and are looking for a customs broker to partner with.”

“We came across your company and would like to learn more about your capabilities and discuss potential ways to partner together,” read the Flexport email, which was shared with JOC.com by multiple forwarders.

Rivals surprised by solicitation

Forwarders that received the inquiries said the request to partner on handling customs entries was highly unusual, given they compete with Flexport for shipper business. Forwarders offering customs brokerage service generally handle customs entries for a processing fee. Deeper relationships between brokers and shippers can involve guidance or strategic consultancy around minimizing tariff exposure.

One forwarder told JOC.com the request was particularly unusual given that brokers generally don’t outsource customs filings work to competitors.

“Back when you needed a local broker, it happened often,” the forwarder said. “For some local entries, you used to have to have a local broker to perform some entry formalities. But that went away some time ago. We no longer need local brokers for that work. Nowadays, it’s generally unheard of.” 

The forwarder did, however, say the request makes some sense given the paucity of available talent with customs brokers licenses, especially in light of increased demand for broker services. “Scaling brokerage labor is hard when it’s not your core competency,” the source said. “It’s a tough market to hire brokers, and they aren’t cheap.”

The forwarder added that a brokerage only needs one licensed customs broker in each office, with other employees able to perform work under the direct supervision of the licensed broker.

Another forwarder told JOC.com it worried that Flexport might be approaching competitors to scout talent it might want to poach. Given the competitive dynamics at play, the forwarder said it would have a difficult time determining if Flexport was a “friend or foe” in the type of partnership the company is proposing.

Flexport has been heavily marketing its customs services in recent months, presumably to tap into shipper uncertainty about how tariffs proposed and enacted over the last three years by the Trump administration might impact their supply chain costs.

Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.