SEATTLE — Two weeks after Seattle trucking startup Convoy abruptly shut down operations and laid off most of its roughly 500 employees, the company’s technology and some of its key personnel will move to fellow freight startup Flexport, according to Flexport’s CEO.
In a memo Tuesday to Flexport staff, CEO and founder Ryan Petersen said his San Francisco-based global shipping company is buying the “technology stack” Convoy developed to automate the process of matching of domestic freight with available trucks.
Flexport is also “planning to retain a small group of [Convoy’s] team members from their core product and engineering team,” Petersen said. That group will include Convoy co-founder and CEO Dan Lewis, according to a report Wednesday in The Wall Street Journal.
On Thursday, a Flexport spokesperson referred questions about the sale to Petersen’s memo, but did not respond to questions about Lewis’ new role at the company.
Petersen didn’t say what Flexport will pay for Convoy, other than to note that the “purchase price relative to value is modest.” Convoy, a former darling of the tech world, hit a value last year of $3.8 billion after raising $930 million in debt and equity, including from Jeff Bezos and Bill Gates, according to The Journal.
Flexport will also acquire Convoy’s network of more than 400,000 trucks that used its scheduling system.
Convoy’s technology will reportedly help build out North American trucking operations for Flexport, which was founded in 2013 as a high-tech shipping intermediary that buys space on container vessels and sells it to customers with freight to ship. Services today also include airfreight, trucking, cargo insurance and customs brokerage.
Petersen stressed that Flexport isn’t acquiring Convoy itself or any of its liabilities, which are reportedly significant.
Convoy’s fortunes plummeted after a collapse in the global freight market, starting in mid-2022, cut deeply into revenues and kept the startup from achieving the load volumes necessary to become profitable.
Despite deep cutbacks, including laying off roughly two-thirds of its staff, Convoy reportedly never regained the confidence of its investors or creditors, and, after failing to find a buyer or merger partner in recent months, was forced to cut remaining staff and close down.
The layoffs, which were made without severance pay, have drawn several lawsuits.
Flexport was also reportedly hit hard by the so-called freight recession, and last month cut 20% of its staff, including 165 in its Bellevue office.
Petersen said Flexport’s strategy in its trucking business “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 [full truck load] accounts.”
He also said Flexport intends to restart some of Convoy’s services to shipping customers, which were abruptly canceled last month, and has “already received positive intent from some of their largest customers to come back.”
