Flexport announced Wednesday that it has acquired Convoy’s technology stack. FreightWaves reported on Friday that the two freight startups were in talks for Flexport, a venture-funded freight forwarder, to acquire Convoy, a freight brokerage that shut down on Oct. 19.
“Flexport’s strategy will be to offer a full range of trucking services to our customers who value us as a one-stop-shop for global logistics,” Ryan Petersen, Flexport CEO and founder, wrote in an email sent to Flexport’s team Wednesday afternoon.
“Thanks to this deal, we’re now in a great position to complete our product vision as a true one-stop-shop to ship any product, in any quantity, between any two places in the world,” he added.
Terms of the agreement were not disclosed Wednesday.
A small number of Convoy employees will join Flexport, according to the email from Petersen. Flexport will not take on Convoy as a company or its liabilities.
Petersen wrote that Flexport customers would again be able to access Convoy’s trucking network in “the coming weeks.” Flexport customers have been able to access Convoy’s network since at least 2021. There are more than 400,000 truck drivers and 80,000 carriers, Petersen wrote in his email.
Convoy officially shuttered operations on Oct. 19, just 18 months after it was valued at $3.8 billion in its final funding round. Convoy’s former CEO and co-founder, Dan Lewis, declined to comment.
See the full email from Flexport founder Ryan Petersen
We’ve acquired Convoy’s technology stack and are planning to retain a small group of team members from their core product and engineering team. We are not acquiring Convoy the company or any of its liabilities, and our expenses will be limited to what’s necessary to maintain the tech.
Although we are not acquiring the business, we will be looking to restore their full-truckload service in the coming weeks and have already received positive intent from some of their largest customers to come back.
In recent years, Convoy became the clear leader in technology for trucking, a vitally important aspect of Flexport’s mission of making global commerce so easy there will be more of it. Trucking is at least one leg of every international shipment Flexport manages. With more than 400,000 truck drivers and 80,000 carriers in Convoy’s network, we will be able to tap into an incredible supply of trucking service providers for our customers. Convoy’s tech stack also includes sophisticated procurement technology that fully automates the supply side for 98% of loads booked. This will allow us to significantly lower our carrier costs on our truckload and eventually our drayage and cartage business.
We made today’s acquisition not just because of the incredible tech stack that Convoy built. We have heard from our customers that they want Flexport to be a one-stop shop for all their logistics needs. Our strategy for the trucking business unit will be very different from Convoy’s or other large truck brokerages who have focused on driving immense scale by pursuing the biggest Fortune 500 FTL accounts. With that scale came complexity and burn, and in a highly competitive market with low barriers to entry, even with all of Convoy’s incredible tech, they were not able to reach the scale required to turn a profit. Their operating position was made much worse by the current freight recession.
Flexport’s strategy will be to offer a full range of trucking services to our customers who value us as a one-stop-shop for global logistics. We’ll offer expanded trucking services, including FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services to customers of our international freight forwarding services. Every container that comes in eventually gets trucked onward to its final destination. Thanks to this deal, we’re now in a great position to complete our product vision as a true one-stop-shop to ship any product, in any quantity, between any two places in the world.
We enter into this transaction with our eyes wide open regarding the discipline and focus required to integrate the technology successfully. We’re not talking about financial risk, as the purchase price relative to value is modest. Rather, as a company, we are already heads down focused on returning our business to profitability, so we will do everything in our power to minimize distraction and ensure that our leaders can stay focused on the mission at hand. As we succeed, the upside from this acquisition is incredibly inspiring, and we’re thrilled to integrate the incredible tech stack from Convoy and the team we’re bringing over to help us offer expanded services for our customers to realize our vision.
Lots more to come as we begin this exciting chapter, and look out for a deep dive on Flexport’s trucking business in our next Global All Hands.