Supply chain logistics platform Flexport is acquiring the assets of shuttered digital freight network Convoy, according to a memo Flexport CEO Ryan Petersen sent to staff Wednesday.
Flexport will restore Convoy’s trucking logistics services for customers in the coming weeks, according to the memo, shared by Freight Waves. Petersen said Flexport won’t acquire the business or any of its liabilities, but does plan to retain “a small group of team members from their core product and engineering team.”
Convoy co-founder and CEO Dan Lewis might be one of the team members joining Flexport, reports the Wall Street Journal, citing a person familiar with the agreement. Lewis did not respond to TechCrunch to confirm.
The terms of the deal were not disclosed, but Petersen 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 round.
Flexport could not be reached for comment.
Petersen also noted that Flexport’s expenses “will be limited to what’s necessary to maintain the tech.” When Petersen took back the CEO title in October after his successor was pushed out, the executive’s big message was about getting Flexport’s finances back in order. He had criticized former CEO Dave Clark for overspending on hiring and expansion. Since stepping back into the CEO role, Petersen has overseen a plan of cost cutting, including laying off about 20% of its workers, or around 600 people.
With that cost cutting also comes a need for Flexport to claw its way back to profitability, and offering a better service is one way to do that.
“We made today’s acquisition not just because of the incredible tech stack that Convoy built,” wrote Petersen. “We have heard from our customers that they want Flexport to be a one-stop shop for all their logistics needs.”
Convoy’s customer base could be a boon to Flexport’s service as well. The once-promising startup boasted more than 400,000 truck drivers and 80,000 carriers in its network, and its tech stack includes “sophisticated procurement technology that fully automates the supply side for 98% of loads booked,” said Petersen. He noted the tech could help Flexport lower carrier costs.
Petersen also laid out how Flexport will approach the business differently than Convoy and other large truck brokerages that have focused on scaling quickly by pursuing big Fortune 500 accounts. That type of scale led to complexity and burn, says Petersen, which made it difficult for Convoy to turn a profit. Convoy’s operating position also was hit by the current freight recession.
In the future, Flexport will offer a full range of trucking services to customers, “including FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services to customers of our international freight forwarding services,” said Petersen.