Since then, various US industry media have published what is said to be a leaked internal memo sent by Convoy CEO Dan Lewis to his company’s employees.
In the memo, the employees were thanked for their work and told it would be their last day in the company.
Estimates about the size of Convoy’s workforce varies. Jobs website Zippia estimates Convoy has 1,500 employees, while the Loadstar reports that as many as 1,000 staff could be impacted by the layoffs made yesterday.
According to US transport media news service Transport Topics, the email was sent to most employees.
Trucking Dive also states it was told by a Convoy spokesperson that “a small team will remain with the company to wind down operations and explore potential strategic options”.
It isn’t clear what those strategic options are, though the severity of the situation likely means those options are few and far between.
The memo also said that Convoy had “spent over 4 months exhausting all viable strategic options for the business” and that a “massive freight recession and a contraction in the capital markets” had led to a “perfect storm”.
Moreover, the memo stated that “market forces were too strong for us to withstand on our own”.
“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,” read a fragment of the aforementioned memo.
The full memo can be read on Geekwire.
After receiving the news, some Convoy employees published updates to their LinkedIn profiles, most of which have been rather upbeat in the circumstances.
One of the company’s senior program managers even said he had heard the news on his birthday.
“Getting the news that your company is shutting down isn’t how you expect your birthday to start, but life has a way of surprising you,” said the now former Convoy employee.
Another staff member who had worked for Convoy for over 7 years added:
“My tenure with Convoy has been a remarkable chapter in my life. It’s been a privilege to work with such an exceptional team, and I’ve had the opportunity to contribute to some incredible projects and initiatives. I’m immensely grateful for the friendships I’ve forged, the lessons I’ve learned, and the experiences that have shaped me both personally and professionally during my time at Convoy.”
Meanwhile, more figures across the logistics industry have been reacting to Convoy’s plight.
Commenting on the news on LinkedIn, Pieter Kinds, CEO of logistics procurement platform Freightender, described one of Convoy’s investors as “clueless” and added: “the writing was on the wall from the first penny of institutional money that was pushed over to Convoy”.
In a seperate post made a day earlier, Kinds made light of quotes that Mosaic had made when it announced an investment in Convoy back in 2017.
Describing some of Mosaic’s comments as “too funny not to mention,” as well as “naive or ridiculous”, Kinds offered the view that Mosaic had massively inflated the value of the market, shown a lack of basic logistics knowledge, and arrogantly believed Convoy not only had the means to disrupt the trucking market, but become the go-to platform for the entire planet. The full take-down can be read here.
Kinds wasn’t the only CEO of a freight procurement platform to comment on the news either. Michael Leto, CEO of Emerge, took to LinkedIn to distance his business from what he refers to as “Digital Brokers” and other freight tech companies in the space.
“Our goal from the start has not just been to digitize brokerage, but to create valuable software tools that both shippers and carriers can use to take the headaches out of freight procurement. We have been disciplined in our efforts to create the first marketplace in the truckload space, and there are billions of $’s moving through our platform on an annual basis,” said Leto.
As for what Convoy’s woes will mean for our other players on the market, Tim Higham,
Higman said his guess was that “30 or 40 new brokerages” would spin up due to Convoy’s collapse in the next 72 hours in order to service their customers.
“All that freight has to go somewhere. EVERY broker is hunting it down as I type. The “big guys” will see an immediate spike in those 5,000 to 10,000 loads per day that Convoy handled. Every broker will be calling their shippers as I type,” added Higman.
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When it comes to what the impact on shippers will be, Higman stressed:
“They will scramble to move freight if Convoy was their lead. They will be p*ssed that they will now have to double pay on loads they already paid Convoy for. They will be asking EVERY other broker they commit freight to for current financials (and, those brokers that don’t meet the sniff test will be ex-communicated immediately). This means the “legacy” (and profitable) brokers will see a LOT more freight from this.”
Worryingly, Higman also wrote that there “absolutely” would be more bankruptcies and that people should watch this space.
Finally, in what appears to have capped off a nightmare week for Convoy, the Loadstar reports that the US digital freight broker has been sued regarding a fatal accident.
According to the Loadstar, it is alleged the accident involved a Convoy-brokered transport and was caused by a driver without a valid licence. It is also claimed that the truck involved in the accident was not legally compliant. The vehicle itself is said to have come from a 3rd party, but was towing a Convoy-branded trailer.
The complainant also alleges Convoy’s business model contributed to the fatal accident. It is claimed that the company failed to take due diligence with regards to its drivers, in what was a deliberate move aimed at maximising its driver pool and reducing costs to undercut competitors.
In addition to this, the complainant has reportedly accused Convoy of mandating unrealistic journey times that compromised safety.