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Supply chain logistics platform Flexport is acquiring the assets of shuttered digital freight network Convoy, according to a memo Flexport CEO Ryan Peterson sent to staff Wednesday.<\/p>\n
Flexport will restore Convoy\u2019s trucking logistics services for customers in the coming weeks, reads the memo, shared by Freight Waves<\/a>. Peterson said Flexport won\u2019t acquire the business or any of its liabilities, but does plan to retain \u201ca small group of team members from their core product and engineering team.\u201d<\/p>\n Convoy co-founder and CEO Dan Lewis might be one of the team members joining Flexport, reports the Wall Street Journal<\/a>, citing a person familiar with the agreement. Lewis did not respond to TechCrunch to confirm.<\/p>\n The terms of the deal were not disclosed, but Peterson said in his memo that \u201cthe purchase price relative to value is modest.\u201d In April last year, Convoy was valued at $3.8 billion<\/a> after a $260 million Series E round.<\/p>\n Flexport could not be reached for comment.<\/p>\n Peterson also noted that Flexport\u2019s expenses \u201cwill be limited to what\u2019s necessary to maintain the tech.\u201d When Peterson took back the CEO title in October after his successor was pushed out<\/a>, the executive\u2019s big message was about getting Flexport\u2019s finances back in order. He had criticized former CEO Dave Clark for overspending on hiring and expansion. Since stepping back into the CEO role, Peterson has overseen a plan of cost cutting, including laying off about 20% of its workers,<\/a> or around 600 people.<\/p>\n 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.<\/p>\n \u201cWe made today\u2019s acquisition not just because of the incredible tech stack that Convoy built,\u201d wrote Peterson. \u201cWe have heard from our customers that they want Flexport to be a one-stop shop for all their logistics needs.\u201d<\/p>\n Convoy\u2019s customer base could be a boon to Flexport\u2019s 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 \u201csophisticated procurement technology that fully automates the supply side for 98% of loads booked,\u201d said Peterson. He noted the tech could help Flexport lower carrier costs.<\/p>\n Peterson 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 Peterson, which made it difficult for Convoy to turn a profit. Convoy\u2019s operating position also was hit by the current freight recession.<\/p>\n In the future, Flexport will offer a full range of trucking services to customers, \u201cincluding FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services to customers of our international freight forwarding services,\u201d said Peterson.<\/p>\n<\/p><\/div>\n