Provide chain logistics platform Flexport is buying the property of shuttered digital freight community Convoy, based on a memo Flexport CEO Ryan Peterson despatched to workers Wednesday.
Flexport will restore Convoy’s trucking logistics providers for purchasers within the coming weeks, reads the memo, shared by Freight Waves. Peterson mentioned Flexport gained’t purchase the enterprise or any of its liabilities, however does plan to retain “a small group of staff members from their core product and engineering staff.”
Convoy co-founder and CEO Dan Lewis is likely to be one of many staff members becoming a member of Flexport, reviews the Wall Avenue Journal, citing an individual accustomed to the settlement. Lewis didn’t reply to TechCrunch to substantiate.
The phrases of the deal weren’t disclosed, however Peterson mentioned 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 Sequence E spherical.
Flexport couldn’t be reached for remark.
Peterson additionally famous that Flexport’s bills “will probably be restricted to what’s mandatory to keep up the tech.” When Peterson took again the CEO title in October after his successor was pushed out, the chief’s huge 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 slicing, together with shedding about 20% of its staff, or round 600 individuals.
With that price slicing additionally comes a necessity for Flexport to claw its approach again to profitability, and providing a greater service is a method to do this.
“We made at present’s acquisition not simply due to the unimaginable tech stack that Convoy constructed,” wrote Peterson. “We now have heard from our prospects that they need Flexport to be a one-stop store for all their logistics wants.”
Convoy’s buyer base might 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 contains “subtle procurement know-how that totally automates the provision aspect for 98% of hundreds booked,” mentioned Peterson. He famous the tech might assist Flexport decrease service prices.
Peterson additionally laid out how Flexport will strategy the enterprise in another way than Convoy and different giant truck brokerages which have centered on scaling rapidly by pursuing huge Fortune 500 accounts. That kind of scale led to complexity and burn, says Peterson, which made it troublesome 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 providers to prospects, “together with FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and finally intermodal (rail) trucking providers to prospects of our worldwide freight forwarding providers,” mentioned Peterson.