Provide chain logistics platform Flexport is buying the property of closed digital freight community Convoy, in accordance with a memo Flexport CEO Ryan Petersen despatched to staff on Wednesday.
Flexport will restore Convoy logistics providers to prospects within the coming weeks, in accordance with the memo shared by Freight Waves. Petersen mentioned Flexport is not going to purchase the corporate or its liabilities, however does plan to retain “a small group of workforce members from their core product and engineering workforce.”
Convoy co-founder and CEO Dan Lewis might be among the many workforce members becoming a member of Flexport, the Wall Avenue Journal reported, citing an individual acquainted with the deal. Lewis didn’t reply to TechCrunch to substantiate this.
Phrases of the deal weren’t disclosed, however Petersen mentioned in his memo that “the acquisition worth is modest relative to the worth.” 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.
Petersen additionally famous that Flexport’s bills “will probably be restricted to what’s mandatory to take care of the know-how.” When Petersen took again the title of CEO in October after his successor was ousted, the director’s massive message was to get Flexport’s funds again so as. He had criticized former CEO Dave Clark for spending an excessive amount of on hiring and enlargement. Since stepping again into the CEO function, Petersen has overseen a cost-cutting plan that features shedding about 20% of his staff, or about 600 folks.
With these value financial savings, additionally it is mandatory for Flexport to change into worthwhile once more, and providing higher service is a method to try this.
“We made at present’s acquisition not solely due to the unbelievable tech stack that Convoy has constructed,” Petersen wrote. “We have now heard from our prospects that they need Flexport to be a one-stop store for all their logistics wants.”
Convoy’s buyer base may be a boon to Flexport’s providers. The once-promising startup had greater than 400,000 truck drivers and 80,000 carriers in its community, and its know-how suite contains “superior procurement know-how that absolutely automates the provision facet for 98% of booked freight,” Petersen mentioned. He famous that the know-how might assist Flexport scale back transportation prices.
Petersen additionally defined how Flexport will strategy the enterprise in a different way than Convoy and different main truck brokers which have targeted on scaling rapidly by pursuing massive Fortune 500 accounts. That sort of scale led to complexity and combustion, Petersen says, making it troublesome for Convoy to show a revenue. Convoy’s working place was additionally affected by the present freight recession.
Shifting ahead, Flexport will provide a full vary of trucking providers to prospects, “together with FTL, LTL, drayage (ocean) freight forwarding, cartage (airport) freight forwarding and finally intermodal (rail) freight forwarding providers to prospects of our worldwide freight forwarding providers. ” mentioned Petersen.