Flexport CEO Ryan Petersen declares 'code red' on AI: custom broker error rate cut 10x, new tariff refund product in the works

Summary

Flexport CEO Ryan Petersen has declared an internal "code red" on AI adoption, framing it as an existential priority after early results proved the technology dramatically outperforms human compliance teams. The catalyst was an AI auditor Flexport launched in October 2024 to review customs entries before transmission to government systems. By November, the tool had reduced the company's customs entry error rate from 1.8% to 0.2%, a tenfold improvement. Petersen describes that data point as the trigger for the broader mobilisation.

The AI auditor now reviews 100% of customs entries before filing, up from the prior standard of human teams reviewing roughly 5%. Petersen is explicit that the same logic applies across Flexport's operations wherever work involves wrangling unstructured data, reasoning through documents, and submitting structured outputs to government or third-party systems. Small internal teams are already running proofs of concept where AI agents handle the majority of tasks currently performed by people.

Petersen says he has no consensus playbook to draw from. He has been in contact with roughly 10 CEOs of established tech companies with similar operational profiles and reports widespread energy at the top but no settled model for deploying AI agents at scale. His stated view is that companies that solve this will displace entire industries, and those already inside an industry must be the ones doing it. He is candid that Flexport could be worthless within a few years if it fails to execute.

Tariff Refund Products

On the tariff side, Flexport shipped a refund calculator from concept to a CNBC appearance in under 72 hours after tariffs were announced on a Friday, with the product live by 7AM Monday. The tool pulls customs entry records from Customs and Border Protection systems, cleans the CSV data, and produces a report showing importers exactly what refunds they are owed. Petersen describes the AI component as modest but the speed of deployment as a competitive signal.

A more financially significant product is in development. Flexport is working on a program to purchase tariff refund claims at a discount and pay importers cash upfront. Petersen declined to announce a launch date but confirmed it is actively in progress. The secondary market for these claims has moved sharply, from roughly 20 to 25 cents on the dollar before the Supreme Court ruling to 50 cents on the day of the ruling and currently trading in the 60s, with large claims reportedly clearing at 70 cents. Petersen believes hedge funds and other buyers will face a structural agency problem because the original importer must still file and pursue the claim even after selling it. Flexport's argument is that its position as the customs broker gives it the operational leverage to actually recover the refund, creating an advantage over financial buyers who hold the economic interest but not the relationship.

Air Freight and Physical Operations

The Strait of Hormuz situation has had limited direct impact on container shipping for Flexport but has materially affected air freight. Middle Eastern carriers control approximately 18% of global air cargo capacity, and their route disruption has caused air freight prices to double. Flexport has built a workaround routing cargo by ocean from Asia to Los Angeles, trucking it directly to LAX, and loading it onto flights bound for Europe, which Petersen says is saving customers both time and money versus direct Asia-to-Europe air.

On warehouse robotics, Petersen remains skeptical despite operating 5 million square feet of fulfillment space. He views the ROI pitches from robotics vendors as possibly too good to be credible and questions whether humanoid form factors make sense in fulfillment environments at all, favouring arm-plus-wheels configurations over bipedal designs. Flexport will likely invest in and consume robotics technology but has no plans to build its own.