Flexport Forecasts 2025 Profit from Convoy Sale, Targets Bigger Market Share by 2026

Flexport's Path to Profitability in 2025

Flexport, a digital freight forwarder, is optimistic about achieving profitability by 2025. This outlook comes as the company recently sold its freight-matching platform, Convoy, for $250 million. The sale was described by CEO Ryan Petersen as a "one-time event" that significantly exceeded the company's annual burn rate.

The acquisition of Convoy, which had previously been defunct, was made for approximately $16 million during its insolvency phase. Since then, Flexport has managed to turn the platform into a valuable asset, selling it just two years later. Without this sale, Flexport would not have met its 2025 profitability target, according to Petersen.

Looking ahead, the company aims for a profitable 2026 driven by organic growth. Flexport plans to expand into new countries, reduce costs, and gain more market share from established competitors like DHL, C.H. Robinson, Kuehne+Nagel, and DSV. Recently, Flexport opened an office in Indonesia and has plans to launch operations in six additional countries in 2026.

Navigating Industry Challenges

Despite these positive steps, Flexport operates within an industry that has faced significant challenges. Decreased demand and slower shipping volume growth have led to lower freight rates. Major players like UPS and FedEx have had to implement mass cost-cutting efforts to save billions and improve efficiency.

Flexport has also had to deal with the on-and-off tariff fluctuations in 2025. Customers were forced to suspend or stop freight bookings when the U.S. imposed "reciprocal" duties on imports in April. However, this situation changed when the tariffs were delayed for three months, leading to a brief peak shipping season in July. Afterward, inbound volumes began to decline starting in August.

Air freight at Flexport has also been impacted by the closure of the duty-free de minimis provision. The Trump administration initially banned the trade exemption for low-value shipments from China in May, and later extended this ban to all foreign goods headed to the U.S. in late August. As a result, Asia-to-U.S. trade lane volumes suffered, and Flexport moved less air cargo for its clients.

Impact of Trade Policy Shifts

According to Petersen, Flexport's warehousing and customs brokerage businesses have benefited from recent U.S. trade policy shifts. The company reported a 99 percent year-over-year increase in gross profit for its customs brokerage and compliance business in 2025.

From a financial standpoint, Flexport was still losing money before the Convoy deal. Shopify's earnings results in August revealed that the e-commerce giant incurred a net loss of $24 million on its Flexport investment in the second quarter. These results are reported on a one-quarter delay, meaning the loss came from Flexport's April-to-June quarter.

Combined with the previous quarter, Shopify lost $47 million over the latest six months reported by Flexport. As of June 30, Shopify's investment in Flexport stood at $595 million, down from $642 million six months prior. Given that Shopify holds a 17 percent stake in Flexport as of September 30, 2023, Flexport's estimated valuation is $3.5 billion, far below its peak of $8 billion in February 2022.

Expanding Financial Services

To improve its financial position, Flexport is expanding its supply chain financing business by partnering with BlackRock. This collaboration will provide $250 million to Flexport, nearly doubling its current lending capacity. The partnership will last four years and allow financing across various points of companies' supply chains through purchase orders, inventory pickup, freight movement, warehousing, and final delivery.

Flexport Capital, the company's financial services arm, has provided over $2 billion since its inception in 2017. This expansion is expected to help companies facing higher tariff costs and other trade-related strains on cash flow.

Looking Ahead

As Flexport continues to navigate the complexities of the logistics industry, its strategic moves and partnerships aim to secure a stronger financial future. With a focus on growth, cost reduction, and innovative financing solutions, the company is positioning itself for long-term success.