Supply chain logistics platform Flexport is acquiring the assets of closed digital freight network Convoy, according to a memo Flexport CEO Ryan Peterson sent to staff Wednesday.
Flexport will reinstate Convoy trucking logistics services for customers in the coming weeks, reads the memo, shared by Freight waves. Peterson said Flexport would not acquire the company or any of its liabilities, but planned to retain “a small group of members of its core product and engineering team.”
Convoy co-founder and CEO Dan Lewis could be one of the team members joining Flexport, reports the Wall Street Journal, citing a person close to the deal. Lewis did not respond to TechCrunch to confirm.
Terms of the deal were not disclosed, but Peterson said in his memo that “the purchase price relative to value is modest.” In April last year, Convoy was valued at $3.8 billion after a $260 million Series E funding round.
Flexport could not be reached for comment.
Peterson also noted that Flexport’s spending “will be limited to what is necessary to maintain the technology.” When Peterson took over the CEO title in October after his the successor was expelled, the big message from the executive was to put Flexport’s finances in order. He had criticized former CEO Dave Clark for overspending on hiring and expansion. Since returning to the CEO role, Peterson has overseen a cost-cutting plan, including lay off around 20% of its workers, or around 600 people.
With this cost reduction also comes the need for Flexport to return to profitability, and offering better service is one way to achieve this.
“We made today’s acquisition not only because of the incredible technology stack that Convoy has built,” Peterson wrote. “Our customers have told us they want Flexport to be a one-stop shop for all their logistics needs. »
Convoy’s customer base could also be a boon for Flexport’s service. The once-promising startup had more than 400,000 truck drivers and 80,000 carriers in its network, and its technology stack includes “sophisticated sourcing technology that fully automates sourcing for 98% of booked loads,” Peterson said. He noted that this technology could help Flexport reduce carrier costs.
Peterson also explained how Flexport will approach the business differently than Convoy and other large truck brokerage companies that have focused on rapid growth by pursuing large Fortune 500 accounts. This type of scale has led to complexity and to exhaustion, Peterson says, which made it difficult for Convoy to turn a profit. Convoy’s operational situation has also been affected by the current freight recession.
In the future, Flexport will offer a full range of trucking services to its customers, “including FTL, LTL, drayage (ocean), trucking (airport) and eventually intermodal trucking (rail) services.” to customers of our international freight forwarding services. “Peterson said.