Lay Offs and CEO Ousted.
Your weekly All-Ways round-up of supply chain news.
Laying Low
Flexport just recently announced that it’s laying off 20% of its employees worldwide because of the weakened economy in the last half of 2022 which cause a softening in freight volume.
“We are overall in a good position but are not immune to the macroeconomic downturn that has impacted businesses around the world,” the co-CEOs of Flexport wrote in the statement. “Our customers have been impacted by these challenging conditions, resulting in a reduction to our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company.”
The company intends on reallocating the money to its software development team, or to be precise, doubling its software engineering talent.
“The current slowdown in volume gives us time to focus on building our technology bench while the economy lags,” Clark and Petersen said. “Then, as the economy recovers, we will be ready to be the Flexport that we all want to be — the one-stop for customers to make the movement of goods around the world easy. But to do that, we’re going to need to be nimble, fiscally responsible, and focused on building fast with operational excellence.”
Flexport, Project44, FourKites, Convoy, and Stord are among the logistic software companies that have announced layoffs. Although no other major forwarders are cutting back on employees right now, weakening freight volume will impact its cash flow.
Unclear Motives
Shocking news! Longtime CEO Bob Biesterfeld of C.H. Robinson, a major freight brokerage company, was laid off. This comes after the company let go of employees in late 2022.
The past year was profitable against all odds and overall positive on many fronts, so it’s unclear why he was let go. Some are speculating that the board was unhappy with some of the decisions Biesterfeld was making.
As of now, the former chairman of the board is stepping up as CEO but that may be just a temporary solution until the company finds a replacement.
Although firing a CEO can have detrimental impacts on a business, a well-established, big industry player like C.H. Robinson will likely be minorly affected by a change of this magnitude.
The freight brokerage industry is fairly easy to get into so there are a lot of small players in the field. C.H. Robinson will probably make it through to the other side if there is a recession while a lot of the small competition will bear the brunt of the economic impact.
But no matter what happens in the next year, one thing IS certain -
All-Ways will be here to assist you with all your needs!