Dive Brief:
- Flexport acquired Convoy’s tech stack for an undisclosed sum, according to a Wednesday blog post, and plans to restore the company’s shuttered full truckload offering in the coming weeks.
- As part of the deal, the forwarder will retain a “small group” from Convoy’s core product and engineering teams, but neither the full business nor any of the truck broker’s liabilities, Flexport Founder and CEO Ryan Petersen said in a published note to employees.
- The acquisition comes just weeks after Convoy shut down, unable to find a buyer. Shortly after the closure, Convoy Co-founder and CEO Dan Lewis said on LinkedIn he was “working on a deal that will include some of the Convoy team and our tech/services.”
Dive Insight:
Flexport plans to use Convoy’s tech as a way to further break into trucking services and bolster its ability to offer customers an end-to-end logistics service.
Convoy’s network included more than 400,000 truck drivers and 80,000 carriers, which Flexport’s customers will be able to tap into once service is relaunched, according to Petersen. He added the acquired tech stack carried additional value, including a strong brand and “sophisticated procurement technology” that automates load bookings and could help lower carrier costs for the business.
However, Petersen cautioned a relaunched truckload service would pursue a different strategy than Convoy did before shuttering. He critiqued Convoy’s and other brokers’ strategy of pursuing the largest accounts as being part of the profitability problem. Pursuing those accounts, he said, is highly competitive and introduces complexity to the system that makes it hard to scale and turn a profit, “even with all of Convoy’s incredible tech.”
So instead of pursuing the biggest Fortune 500 accounts for truckload services, Flexport is hoping to offer trucking services as part of an integrated logistics offering to its customers.
“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,” Petersen said, noting the full suite he envisions eventually includes full truckload, LTL, drayage, cartage and intermodal trucking services.
Flexport’s vision would place it in a crowded field. Companies like J.B. Hunt and RXO have a large portfolio of trucking services as part of their brokerage services, and several others — like A.P. Moller - Maersk, C.H. Robinson Worldwide and The Kuehne+Nagel Group — promise shippers integrated logistics services with access to several transport modes.
The acquisition also comes at a tumultuous time for Flexport. In the past few months, the company has parted ways with several top leaders and laid off 20% of staff as Petersen took back the reins of the company, pledging to refocus it.
The timing was not lost on Petersen, who assured employees the purchase price of the deal was “modest” relative to its value, but also reminded them it would take “discipline and focus” to successfully integrate the technology.
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