Convoy is shutting down operations after it failed to find a buyer amid “massive freight recession.”
In an internal memo on Thursday, co-founder Dan Lewis told employees, “Today is your last day at the company.” It further sympathizes with staff: “We hoped this day would never come.”
The news broke a day prior when all shipments were canceled. It was not an easy decision, as the company took four months to “exhaust all viable strategic options” before concluding to wind down operations.
“Convoy will be closing down its current core business operations. Some of our team will continue to handle this windup transition and potential future strategic options; today is your last day at the company,” notes the memo.
Massive freight recession
Convoy says there is a “massive freight recession and contraction in the capital markets.” It believes the current climate “ultimately crushed our progress” and its logical strategic acquirer.
“A perfect storm” is how Lewis describes the situation that ultimately toppled the company.
But in the end, market forces were too strong for the company to withstand it alone. “Alongside this unprecedented freight market collapse, the dramatic monetary tightening we’ve seen over the last 18 months has dramatically dampened investment appetite,” says Lewis. Amidst these freight and financial conditions, “most of logical strategic acquirers of Convoy are also suffering from the freight market collapse, making the deal doing that much harder.”
There are concerns in the industry that more freight brokers could also find themselves in a similar position soon. The freight broker business was booming during the COVID-19 pandemic when the volume of shipments increased. The volumes have decreased, and the delivery cost has dramatically reduced.
“Some of the banks have been lending money to a number of these digital brokers, and apparently their balance sheets don’t look great,” says Steve Orenstein, Locate2u CEO. “Hopefully, these businesses can sort of control their costs and funding and recover.”
Building something new is daunting
Just last month, Lewis tweeted on X (formerly Twitter): “Building something new is daunting, but much less so when you’re surrounded by like-minded talent and a community that wants you to win. That’s the mindset inside of Convoy for building new things…but it turns out that this doesn’t end at our doors. A lot of startups were formed by Convoy alumni.”
Earlier this year, Lewis also shared his thoughts on the future of trucking. In May, he wrote on X: “The future of trucking is the hybrid carrier, a new model that leverages technology to overcome long-standing industry fragmentation and finally provide shippers with the benefits of economies of scale.” Little did he know that he’d be shutting down the startup five months later.
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Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
