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Convoy autopsy continues: Panel sees capacity issues, lack of discipline

At Benesch forum, industry execs see several reasons for rapid fall of digital pioneer

That disappearance of Convoy became the lead topic of discussion at the first panel of the Investing in the Transportation & Logistics Industry Conference earlier this month. (Photo illustration: Jim Allen)

NEW YORK — The movers and shakers who descend on New York City each December to talk about the role of private equity and venture capital in transportation did so this year against a backdrop of a major development this year: the collapse of venture capital-funded Convoy.

That shocking disappearance became the lead topic of discussion at the first panel of the Investing in the Transportation & Logistics Industry Conference earlier this month sponsored by the transportation practice of the Benesch Law Firm.

Moderator Marc Blubaugh, the head of the transportation group at the firm, asked panelists chosen to talk about innovative technology what happened at the digital brokerage that had made such a huge mark on the trucking industry in just a few years. The panelists had no shortage of observations.

As the CEO of a more traditional 3PL impacted by Convoy, Echo Global Logistics CEO Doug Waggoner saw firsthand how a well-funded digital brokerage operated. And while he said the Convoy technology was “very good, I would even say gold-plated,” he also saw shortcomings in its market position. 


From left to right: Marc Blubaugh, Benesch; Doug Waggoner, Echo Global; Kendra Tucker, Truckstop; Tobenna Arodiogbu, CloudTrucks. (Photo: Benesch)

Convoy’s strength was in “short-haul regional freight,” Waggoner said. “They really weren’t playing with the big carriers so they never had the capacity.” 

Waggoner said the average length of haul at Convoy was about 350 miles; at Echo Global, it is about 760. “So it’s two different markets.” 

Echo’s internal classifications divide up the carrier pool into five tiers, according to Waggoner. Owner-operators would be in the lowest tier; big carriers like Knight-Swift (NYSE: KNX), which he cited by name, would be tier 5. The best pricing Echo gets is from those tier 5 carriers. 

“The big carriers are more sophisticated in how they price,” he said. “So as long as we’re smart and know where to look, we can get the best pricing.” 


Waggoner said the rates Echo gets from those tier 5 carriers are often 50 cents per mile less than the broader market. “So Convoy had a disadvantage right there.” 

The discussion on Convoy and venture capital had an underlying theme: VC funding is great but it can be like a rocket spinning out of control if not managed well.

Kendra Tucker, the CEO of Truckstop, said she looked at the Convoy collapse with “a lot of compassion and empathy because it was a business with a lot of passion and good intention.”

But she said that Convoy, founded in 2015, was in a position to get more funding during a period between 2017 and 2022 with “transportation really becoming quite sexy. VCs started to get in and that didn’t apply just to Convoy.” It resulted in a valuation that at one point topped $3 billion. 

But the money was fast and loose. Tucker said “one of the things that makes third-party logistics providers really great is the discipline with which they run their business. And venture capital is not necessarily known for that.”

Waggoner said, “I think they got a lot of the VC hype that comes with being a tech startup and having big-name investors,” including Bill Gates and Jeff  Bezos and money managers T. Rowe Price and Baillie Gifford.

Tobenna Arodiogbu, the CEO of CloudTrucks (whose own VC-backed company has had to fight off reports this month of financial troubles), said for all venture capital-based investors, “there is a very thin line between success and failure. Like, change a few things here and there, change rates a little bit and maybe you’ll be a really large brokerage.”

Arodiogbu said the biggest lesson he takes away from the Convoy collapse is that “things change very rapidly and we should change things very rapidly as well.”


Specifically for Convoy, Arodiogbu said that as markets softened, “they didn’t cut their research and development costs fast enough.” And that failure to do so goes to the earlier statements about discipline.

The positive legacy of Convoy, Arodiogbu said, is that it forced gains in technology throughout the industry. “It forced everyone else to be really aggressive on how much they have to invest in technology,” he said. “And that’s benefited everyone.”

But even with all the praise for its technology that Convoy received (with Flexport buying the company’s technology stack following the Convoy closure), Waggoner suggested it was not unique. “It wasn’t like you could do a lot of things that our technology doesn’t.” 

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.