AI Is Eating Logistics

Logistics are a very scale-driven industry. And so the bigger you get, the cheaper you get. Our take is that we can make the price of shipping anything by ocean container shipping between eight and 10% cheaper over the next few years, and AI is a big part of that. So our AI for that saved us 2% of our ocean f- freight spend while improving transit time 20%. Usually, that's a trade-off. It's like it's either faster or cheaper-

Yeah.

... but not both.

And you're at two billion dollars a year revenue and just getting started. (instrumental music plays) Welcome back to another episode of The Light Cone. We've got a real treat today, we have Ryan Peterson of Flexport with us, he went through YC in 2014 and he is easily one of the most awesome founders I've ever met. (laughs) Ryan, thanks a lot for joining.

Thank you.

To start, Ryan, uh, what is Flexport and what are some of the things in AI you're actually implementing right now?

So Flexport is a global logistics company built around a modern tech stack. And that means we help companies ship cargo from point A to point B across any mode of transport, so air, ocean, truck, and rail, and get that cargo delivered hopefully on time and in full at a lower cost thanks to the tech. What we're doing with AI is, uh, may, it's an exhaus- I have to make an exhaustive way to extend the length of the podcast to pull that off. But it starts with customer user experience, what can we do with their data, getting them better access, how do we load containers in the optimal way, how do we, uh, put that container onto the right ship at the lowest cost while maintaining or beating transit time expectations? Automating just tons of work that's done in email or that you d- or phone, or work that you wouldn't even do because the cost is too high for a human but actually does create some value that's worth it with AI. So most contracts in logistics come in giant Excel files, thousands of rows and, you know, a dozen tabs. You can't just feed that to OpenAI and get an ans- get a structured JSON file back. It needs intelligence. But writing code and then having AI write the code, you write a parser that ingests it and then have AI that can write those parsers for you learning. There's an endless list and we feel like we don't even know all the things that it can do, it's still pretty new.

So basically one of the most, uh, human-intensive things now can be streamlined to the point where actually it might, uh, affect GDP in the world.

Our, our take is that we can make the price of shipping anything by ocean container shipping cheaper by between eight and 10% cheaper over the next few years. And AI is a big, not the only part of that, but a big part of that. As our, our business model, the way we think about it is as, I call it scale economies shared, which is the bigger you get, the cheaper you get. The more au- automation is a form of scale, and the bigger you get or the cheaper you get, you lower your, the lower your cost, you give that, share that with your customer which will make them do even more volume with you. There's scale benefits that come, logistics are a very scale-driven industry, uh, and so the bigger you get, the cheaper you get. Like the Costco model, I like, I like, I love Costco, even though I don't shop there, I just love the business. Uh, you keep driving down the price, that makes you more attractive, more competitive and, and just keep going. Yeah.