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Digital freight broker Convoy shutting down due to ‘unprecedented freight market collapse’

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Seattle-based startup Convoy will be closing their doors for good, according to an internal memo released shortly after the company canceled loads and emptied load boards on Wednesday.

On October 18, reports emerged that digital freight brokerage Convoy could be in trouble after  leadership told workers to stop processing new orders and to cancel existing shipments. The reports also indicated that a major announcement was coming.

On the morning of Thursday, October 18, Convoy CEO Dan Lewis confirmed the news that Convoy would shutter core operations in an internal memo to employees.

“Convoy will be closing down its current core business operations. Some of our team will continue on to handle this windup transition and potential future strategic options (all whom have already been spoken with), today is your last day at the company,” Lewis wrote.

Convoy employs about 500 people.

Lewis cited an “unprecedented freight market collapse” and “dramatic monetary tightening” over the past 18 months as reasons for the company closure.

Convoy previously went through a series of layoffs in June 2023, February 2023, October 2022, and June 2022. The company also recently shuttered an Atlanta office that was opened in 2019. In August 2023, The Information reported that Convoy was exploring strategic options including the sale of the company.

Convoy was founded in 2015 and describes itself as “the nation’s leading digital freight network.” The company was valued at $3.8 billion last year.

You can read the full memo below.

From: Dan 

Re: Business Update 

All, 

As you’re all aware, over the past few days we’ve been taking actions to minimize disruptions to shippers and carriers by ensuring that all in-transit shipments get to their proper destinations. Thank you to everyone who stayed focused and got it done. As usual, you guys do amazing work. With that action nearing completion, Convoy will be closing down its current core business operations. Some of our team will continue on to handle this windup transition and potential future strategic options (all whom have already been spoken with), today is your last day at the company. 

We hoped this day would never come. We spent over 4 months exhausting all viable strategic options for the business. However, none of the options ultimately materialized into anything sufficient to keep the company going in its then current form. 

So, what happened? In short, we are in the middle of a massive freight recession and a contraction in the capital markets. This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer – it was the perfect storm. 

Convoy’s tech centric approach to trucking created real benefits. It also created the conditions for a truly scalable technology platform and business model that would have yielded real financial gains when market conditions improve. But in the end, market forces were too strong for us to withstand on our own. 

We moved all business levers possible. But we were running up the down escalator…. and it kept speeding up. So despite your excellent work on our product and service innovation, extensive revenue driving efforts, and the painful and sweeping cost cuts you have had to endure, it was still not enough to get us into the financial position necessary to withstand the increasing pressures of the industry, without the need for outside funding. 

Alongside this unprecedented freight market collapse, the dramatic monetary tightening we’ve seen over the last 18 months has dramatically dampened investment appetite and shrunk flows into unprofitable late stage private companies. Add to that, amidst these freight and financial conditions, M&A activity has shrunk substantially and most of logical strategic acquirers of Convoy are also suffering from the freight market collapse, making the deal doing that much harder. 

The perfect storm.

Following an exhaustive process, spanning many, many months during which we explored all viable strategic options for the business, the result is where we are today. Convoy is closing the doors on its current core business operations and exploring and evaluating strategic options for what might come next. 

The work you’ve all done will leave its mark on the freight industry forever. This industry needs to modernize. Shippers want it, carriers want it, and the market wants it. We still believe that this will be the future for this industry. 

As I just shared on our call, I think the world of you. Over the past few months I experienced some of the highest highs and lowest lows in business, but throughout it I remained motivated because of the incredible people at Convoy who gave me inspiration every day. You guys rock. 

#TruckYeah, 

Dan

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