Convoy, the much ballyhooed digital freight broker that attracted large investments from several famous investors, has closed its doors.
Supply Chain Digest Says...
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Signs of trouble were there. Convoy conducted multiple rounds of layoffs over the past year and shuttered an Atlanta office. At its peak, Convoy had about 1500 employees.
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Seattle-based Convoy told employees in an October 19 memo it was shutting its doors after no viable options to continue operations emerged, according to CEO Dan Lewis.
Prior to this news, the company had about 500 employees. Investors in Convoy, touted by many as a market “disruptor by electronically matching shippers with carriers, including Microsoft founder Bill Gates and Amazon founder Jeff Bezos. Lewis previously worked for Amazon, Google and Microsoft before starting Convoy.
Those two are hardly the only ones that apparently are losing most or all of their investment. In 2022, Convoy secured a $260 million round of new capital from investors, led by UK-based Baillie Gifford and Hercules Capital, while JPMorgan extended a $150 million line of credit to Convoy, valuing it at $3.8 billion just 18 months ago.
All told, Convoy had raised more than $1 billion from investors, according to data from research firm PitchBook.
Looks like this wasn’t the “smart money.
Convoy, founded in 2015, emphasized mobile apps, and competed with Uber Freight and other start-ups, as well as established freight brokers trying to go more digital.
Founder and CEO Lewis in part blamed what he called a “massive freight recession” for the company’s demise. Ryan Petersen, founder and CEO of digital freight broker Flexport, cited similarly dire international freight market conditions in announcing layoffs of nearly 30% of its employees just two weeks ago.
The closure at Convoy came a day after reports began emerging that it had stopped booking new shipments.
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In his employee memo, Lewis also stated that “Following an exhaustive process, spanning many, many months during which we explored all viable strategic options for the business, the result is where we are today.”
Lewis added that “Convoy’s tech-centric approach to trucking created real benefits. It also created the conditions for a truly scalable technology platform and business model that would have yielded real financial gains when market conditions improve. But in the end, market forces were too strong for us to withstand on our own. We moved all business levers possible. But we were running up the down escalator.”
Signs of trouble were there. Convoy conducted multiple rounds of layoffs over the past year and shuttered an Atlanta office. At its peak, Convoy had about 1500 employees.
The idea and strategy behind Convoy, Lewis argue, are the right ones.
“The work you’ve all done will leave its mark on the freight industry forever,” Lewis wrote to employees, adding that “This industry needs to modernize. Shippers want it, carriers want it, and the market wants it. We still believe that this will be the future for this industry.”
The real question: are there more shoes to drop?
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