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Dive Brief:
- Flexport has acquired Convoy’s tech stack for an undisclosed amount, according to a Wednesday Blog Postand plans to restore the company’s closed truck offering in the coming weeks.
- As part of the deal, the forwarder will retain a “small team” of Convoy’s core product and engineering teams, but not all of the operations or any of the truck broker’s responsibilities, Flexport founder and CEO Ryan Petersen said in a published memo to employees.
- The acquisition comes just weeks after Convoy closed after failing to find a buyer. Shortly after closing, Convoy co-founder and CEO Dan Lewis he said on LinkedIn “was working on a deal that will involve part of the Convoy team and our technology/services.”
Dive Insight:
Flexport plans to use Convoy’s technology as a way to further penetrate trucking services and enhance 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 customers will be able to tap into once service resumes, according to Petersen. He added that the acquired technology stack had added value, including a strong brand and “advanced procurement technology” that automates cargo bookings and could help reduce carrier costs for the business.
However, Petersen cautioned that restarting truck service would follow a different strategy than Convoy did before it closed. He criticized the strategy of Convoy and other brokers to go after the biggest accounts as part of the profitability problem. Pursuing these accounts, he said, is highly competitive and introduces complexity into the system that makes it difficult to scale and turn a profit, “even with all of Convoy’s incredible technology.”
So instead of going after the largest Fortune 500 accounts for trucking services, Flexport hopes to offer trucking services as part of a complete 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,” said Petersen, noting that the full suite envisioned will eventually include full truckload, LTL , drayage, cartage and intermodal trucking services.
Flexport’s vision would place it in a crowded field. Companies such as JB Hunt and RXO have a large portfolio of trucking services as part of their brokerage services, and several others — such as AP Moller – Maersk, CH Robinson Worldwide and the Kuehne+Nagel Group — promise shippers comprehensive logistics services with access to various modes of transport.
The acquisition also comes at a tumultuous time for Flexport. In recent months, the company has they parted ways with several top leaders and laid off 20% of the staff as Petersen took back the reins of the company, pledging to refocus it.
The timing was not lost on Petersen, who assured employees that the deal’s purchase price was “moderate” relative to its value, but also reminded them that it would take “discipline and focus” to successfully integrate the technology.
This story was republished by our sister publication, Supply Chain Dive. Register here.