Convoy Acquisition: Key Details, Impact, and What Comes Next

Flexport's acquisition of Convoy's technology marks a significant step in the logistics industry. By integrating Convoy's advanced trucking technology, Flexport aims to enhance its service offerings and streamline operations. This strategic move positions Flexport as a more comprehensive logistics provider, potentially reshaping the digital freight landscape and meeting growing customer demands for efficient, one-stop logistics solutions.

What Is Convoy?

Founded in 2015, Convoy is a marketplace designed to match and execute freight efficiently for brokers and carriers. Its core services include a free app for carriers to keep their trucks full on preferred lanes and tools for brokers to expand truckload capacity while saving time and money. Convoy's unique selling points include smart matches between brokers and trusted carriers, smoother hauls, and scalability for brokers, making it a standout in the logistics industry.

Who Acquired Convoy?

Flexport serves as a comprehensive logistics platform, coordinating global supply chains from the factory to the customer door. The company offers a range of services including freight forwarding, customs brokerage, trucking, and fulfillment. Flexport's key products include the Flexport Client Platform, eCommerce Fulfillment, and the Omnichannel Seller Portal. Trusted by over 10,000 clients, Flexport is recognized for its innovative technology and significant influence in the logistics industry, partnering with major platforms like Shopify and Walmart.

When Was Convoy Acquired?

Flexport announced the acquisition of Convoy's technology on November 1, 2023. This move comes amid a freight recession, which has seen many logistics companies struggle. Flexport's acquisition aligns with its strategy to enhance service offerings and improve financial health under CEO Ryan Petersen. The timing also reflects broader industry trends towards digital transformation and the need for integrated logistics solutions, positioning Flexport to better navigate the challenging market conditions.

Why Was Convoy Acquired?

• Market Expansion: Flexport aims to become a one-stop shop for all logistics needs by integrating Convoy's trucking logistics services. This expansion includes offering a full range of trucking services such as FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services. Additionally, Flexport plans to expand the offerings of the Convoy Platform for brokers in Q2 2024, providing them access to high-quality capacity backed by market-leading fraud detection technology and ongoing automated predictive performance scoring and quality control.
• Technology Integration: Flexport is acquiring Convoy's technology stack, which includes sophisticated procurement technology that automates the supply side for 98% of loads booked. This technology is expected to help Flexport lower carrier costs and improve service offerings. The Convoy Platform integrates industry-leading technology to provide near real-time visibility, exceptional on-time performance, and competitive rates for shippers and brokers. The platform includes features such as fraud detection technology, automated predictive performance scoring, and quality control.
• Competitive Advantage: By acquiring Convoy's technology and customer base, Flexport aims to enhance its service offerings and reduce costs, which could provide a competitive edge. Convoy's network of over 400,000 truck drivers and 80,000 carriers, along with its advanced technology, is expected to be a significant asset for Flexport. The platform's technology enables precise shipment visibility, exceptional on-time performance, and competitive rates. Flexport's investment in fraud detection technology and automated performance scoring enhances the reliability and quality of the service, giving it a competitive edge in the logistics industry.

Acquisition Terms

• Acquisition Price: The exact acquisition price is not disclosed. It is described as "modest relative to value."
• Payment Method: The payment method is not specified.
• Key Conditions or Agreements:
  • Flexport is acquiring Convoy's technology stack and retaining a small group of team members from Convoy's core product and engineering team.
  • Flexport is not acquiring Convoy's overall business or any of its liabilities.
  • The acquisition does not include physical assets such as real estate or truck trailers.
  • Flexport plans to restore Convoy's full-truckload service and has received positive intent from some of Convoy's largest customers to return.
  • Flexport's expenses will be limited to what is necessary to maintain the acquired technology.

Impact on Convoy

The acquisition of Convoy's technology by Flexport has led to significant changes in operations and management. Flexport has retained a small group of Convoy's core product and engineering team members, including the potential addition of Convoy's CEO, Dan Lewis. This move aims to integrate Convoy's advanced technology into Flexport's existing operations, enhancing their service offerings. However, Flexport is not acquiring Convoy's overall business or liabilities, focusing solely on the technology stack to streamline and improve their logistics services.

In terms of product offerings, Flexport plans to restore Convoy's full-truckload service and expand its trucking services to include FTL, LTL, drayage, cartage, and eventually intermodal services. The integration of Convoy's technology is expected to lower carrier costs and improve service efficiency, benefiting both shippers and brokers. Employee reactions have been mixed, with some excitement about the new opportunities, while over 500 Convoy employees were laid off due to the company's closure. Customer reactions have been largely positive, with many expressing relief and enthusiasm about the return of Convoy's technology under Flexport's management.

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