Convoy Inc. will be “closing down its core business operations,” the company’s employees were starkly told Thursday, roughly one day after its fate was suddenly and publicly thrown into doubt.
In the letter from the Seattle-based digital brokerage’s CEO and co-founder Dan Lewis that followed a companywide phone call, there was no suggestion that Convoy was about to see its digital brokerage operations snatched up by another suitor, as the rumor mill had churned out several names Wednesday. The company will retain a small team that will not only wind down existing operations but “handle … future strategic options.” Beyond that, every other employee was let go.
“We spent over 4 months exhausting all viable strategic options for the business,” Lewis wrote. “However, none of the options ultimately materialized into anything sufficient to keep the company going in its then current form.”
Later in the letter, Lewis added: “Following an exhaustive process, spanning many, many months during which we explored all viable strategic options for the business, the result is where we are today. Convoy is closing the doors on its current core business operations and exploring and evaluating strategic options for what might come next.”
Several employees told FreightWaves on Thursday that they were not offered severance, adding that benefits will be available through the company until the end of the month, then through COBRA until the end of November.
The ultimate blame for the collapse, according to Lewis, is that Convoy found itself in “the middle of a massive freight recession and a contraction in the capital markets. This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer — it was the perfect storm.”
But it wasn’t just the “logical strategic acquirer,” according to Lewis. There has been a drop in merger and acquisition activity in the logistics sector and “most of the logical strategic acquirers of Convoy are also suffering from the freight market collapse, making the deal doing that much harder.”
The identity of the “logical strategic acquirer” was not revealed. But multiple reports did say C.H. Robinson (NASDAQ: CHRW) was in advanced talks about an acquisition of Convoy. C.H. Robinson’s prior CEO, Bob Biesterfeld, was ousted at the start of the year reportedly because of a lagging performance of its technology to compete with digital brokerages like Convoy. C.H. Robinson certainly has undergone “crushing” times: Its stock is down about 10.5% in the last year and about 15% in the last three months. It was trading midday Thursday at about $83, well down from a 52-week high from early February of $108.05.
C.H. Robinson declined comment on any acquisition discussions with Convoy.
Lewis’ letter pulled no punches. “We moved all business levers possible,” he wrote. “But we were running up the down escalator … and it kept speeding up. So despite your excellent work on our product and service innovation, extensive revenue driving efforts, and the painful and sweeping cost cuts you have had to endure, it was still not enough to get us into the financial position necessary to withstand the increasing pressures of the industry, without the need for outside funding.”
Lewis’ letter praised the company’s workforce several times. This passage was typical: “The work you’ve all done will leave its mark on the freight industry forever. This industry needs to modernize. Shippers want it, carriers want it, and the market wants it. We still believe that this will be the future for this industry.”
He closed the missive by telling his staff, “I think the world of you. You guys rock.”
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Good riddance
Domino Karma
A part of the issue with Convoy is this. God sent the evil to control the wicked.
They seen an opportunity where they being the evil were poised to control the market and with no overhead, no one could stop the steal.
They were trying to take more market share from the big boys. Hunt, Swift, WERNER And scores of others.
It’s like a jungle sometimes it makes you wonder how you keep from going under.
Up jump the monkey from the coconut grove. He came in with his whiz bang app. Trading it like a Mirror and the lighter to the savages.
They fatten up their prey. And then they eat them. And they did not leave any meat on the bone. And what you had left was starving and showing it’s ribs . The whole move was predatory.
They drop the bomb on the industry with their technology. And they lacked any corporate governance or control.
The domino effect impacted the entire industry, and all things associated to it. The transportation industry is what they were targeting to destroy. It was the prey. Everyone else is just casualties of the greed in other men.
Even the government who may say that they have checks and balances by trying to enforce transparency, with all other brokers. The measure the brokers take is if a carrier would demand it, they just stop using that carrier.
You have people lobbying to protect the brokers, who are destroying trucking the transportation department.
Meanwell, you got little Joe Trucker) out there hoping he don’t have any equipment failure between loads or his family doesn’t eat. Or he didn’t pay his house payment, that he never gets to sleep in anyway,. Can you imagine working in three straight weeks to come home to a house For three or four days? And then the industry get so messed up , you cannot pay your mortgage or lease payment. And you lose a loan with your family. And then BROKER’s like Convoy, and many others blow you off like you never existed.
And all the Convoy employees you should remember the truckers that you’re screwed over. Regrettably, even though you guys were ponds for them. You had to say. Maybe your say
Freight Zippy
Brokers are the reason the business is in turmoil. In this case they deserve to be shut down.
Until drivers cease using Brokers this will continue, being a broker takes no talent only an account or two, a cell phone and the ability to take advantage of drivers who have no sales contacts.
Most Brokers have no conscience and deserve this result as they prey on drivers who are in desperate need of a load. In almost every case the broker makes a larger profit than the operator..
Every driver must refuse to work with a Broker, back sell them as they do to others…
Eddie
I’m very pleased to watch Convoy fold! This is like watching someone drown that doesn’t know how to swim, and all the bystanders are Olympic swimmers and won’t save the person drowning.
Screw Dan Lewis and Mark Okerstrom
Your joke of a goodbye was so painful to listen to. You gave us zero severance and fought so “desperately” but couldn’t even let us keep our computers? You guys should be ashamed of yourselves. Then you let some of you team think they still had a job (to “wind down”) only to unceremoniously cut them too by not inviting them to a meeting with a minute’s notice. Two terminations in one day for a handful of folks. Oh, and should we mention Mark O gets to go back to any number of his houses and announce he’s so proud of us but as acting CFO he couldn’t have the foresight to try and maintain a small severance for the team that stuck with them? Go to hell, Mark. Tally this as another company you tried to–and this time succeeded to ruin. Your fake-goofy attitude to try and come across as fun has no one fooled. You’re an empty suit and a death spiral to any company you touch.
Domino Karma
Convoy started out beating all the rates. They use small independent companies like myself. To help them get started. At first they had some of the best rates out there. I made good money with them. And then they reversed it on all of us. One of their brokers called it market penetration. We called it a wolf in sheep‘s clothing.
They claim that they were not like all other brokers, and that they were just getting a fee from the shippers to help manage thier logistics.
They claimed they were not driven by gouging all the carriers profits. Which was a lie they became worse than all the brokers who would steal the real profits from the carriers .
They single-handedly crashed the trucking market.
1. They made it hard for asset base carriers to compete. Mainly because they had way less overhead. At first they had no equipment, no maintenance. No fuel cost.
2. That gave them a big jump into the business. That’s why they grew so fast.
3. Once they crippled the big names and Trucking, like Celadon, JB, Hunt, Swift, etc. etc..
4. Then they put the squeeze on the little guys.
5. Once they did that they start buying equipment and shooting themselves in the foot. Which, in my opinion was a total paradigm shift from the way they started.
Basically for Convoy it was a six or seven your money grab, trash the market and they’re out. Now you got a bunch of rich guys at the top. Who did not give a damn about their employees just like they didn’t give a damn about the small companies out here trying to ramp up. If your truck broke down, they would not even give you an advance pay work you’ve done. Or reputation you were building with them. To help you stay in business. They became heartless.
They made a lot of millionaires, if not billionaires at the top in a short period of time.
Corporate greed ruined a pretty good technology trend.
They should’ve stayed in the digital space . Buying trailers and trying to hog the business was their.
Because that gave them the taste of reality that all the real truckers that he had to deal with big and small.
Their employees, we’re expendable, just like the big companies were, and all the small companies who they screwed for frivolous reasons. They also had a bunch of unprofessional people that had no tact and no conscious and thought they were above the reality of what the primary objective was cripple, the transportation, industry, and then runoff and try to blame it on the recession.
James
One word karma actually two words greed also fits the narrative! now you know how the carrier’s that went belly up pulling your cheep loads felt just trying to survive hoping for something better to come along. But unlike your employees I’m sure you left with plenty of money in your pockets from your little adventure. To be honest It couldn’t have happen to a nicer bunch of investors I love seeing people like bill gates, warren buffet, Jeff Bezos the Biden klan as I like to refer to supporters to line their pockets loose their A$$ Karma’s A BI$$CH this country would be doing great had Biden not shut down the pipe line but if y’all do a little research every now and then you’d see that pipe line was going to hit warren buffet right in the old pocket book because it’s his railroad that hauls the crude oil out of Canada that’s gotta be real good for the climate whole lot cleaner than an old pipe line! Boy we dodged a bullet there. research these companies people before you line yourself and your company with the likes of them! Because at the end of the day you’re the one who’s going to lose! Hey CEO the big guy still wants his 10% and by the way where’s the secretary of transportation little Pete haven’t seen him doing anything lately come to think of it I haven’t seen him do anything at all in regards to the transportation of this once great country has anyone else seen him? I bet he there every pay day tho. This dog and pony show that soooooo many people have supported is really going south for the country!!! Well that’s my take on this whole ordeal hopefully maybe just maybe some of the things I’ve pointed out might make some of you people think about it a little bit more especially when it’s time to VOTE!! Unless you just like seeing this country fall from the likes of these people remember what I said they don’t have a problem buying gas,food ect because there using your money they profited from your hard work your tax dollars!
Ross
It came to the point tons of companies – carriers and brokers – are already failing, time for the customers to have their stuff sit at docks for weeks and them will see how suddenly they will pay. Bloodbath is very soft term these days, doomsday is here and if all supply chains fail, society stays without food – then it will realize how important is to actually feed the horse pulling the wagon, not the one with the lash