Provide chain logistics platform Flexport is buying the belongings of shuttered digital freight community Convoy, in line with a memo Flexport CEO Ryan Peterson despatched to workers Wednesday.
Flexport will restore Convoy’s trucking logistics companies for purchasers within the coming weeks, reads the memo, shared by Freight Waves. Peterson stated Flexport gained’t purchase the enterprise or any of its liabilities, however does plan to retain “a small group of crew members from their core product and engineering crew.”
Convoy co-founder and CEO Dan Lewis is perhaps one of many crew members becoming a member of Flexport, stories the Wall Road Journal, citing an individual accustomed to the settlement. Lewis didn’t reply to TechCrunch to verify.
The phrases of the deal weren’t disclosed, however Peterson stated in his memo that “the acquisition worth relative to worth is modest.” In April final 12 months, Convoy was valued at $3.8 billion after a $260 million Collection E spherical.
Flexport couldn’t be reached for remark.
Peterson additionally famous that Flexport’s bills “will likely be restricted to what’s needed to keep up the tech.” When Peterson took again the CEO title in October after his successor was pushed out, the chief’s large message was about getting Flexport’s funds again so as. He had criticized former CEO Dave Clark for overspending on hiring and growth. Since stepping again into the CEO function, Peterson has overseen a plan of price chopping, together with shedding about 20% of its staff, or round 600 folks.
With that price chopping additionally comes a necessity for Flexport to claw its manner again to profitability, and providing a greater service is a technique to try this.
“We made right now’s acquisition not simply due to the unbelievable tech stack that Convoy constructed,” wrote Peterson. “Now we have heard from our prospects that they need Flexport to be a one-stop store for all their logistics wants.”
Convoy’s buyer base could possibly be a boon to Flexport’s service, as effectively. The once-promising startup boasted greater than 400,000 truck drivers and 80,000 carriers in its community, and its tech stack consists of “subtle procurement know-how that absolutely automates the provision facet for 98% of hundreds booked,” stated Peterson. He famous the tech might assist Flexport decrease provider prices.
Peterson additionally laid out how Flexport will strategy the enterprise otherwise than Convoy and different giant truck brokerages which have centered on scaling shortly by pursuing large Fortune 500 accounts. That kind of scale led to complexity and burn, says Peterson, which made it tough for Convoy to show a revenue. Convoy’s working place additionally was hit by the present freight recession.
Sooner or later, Flexport will provide a full vary of trucking companies to prospects, “together with FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and ultimately intermodal (rail) trucking companies to prospects of our worldwide freight forwarding companies,” stated Peterson.