Several trucking companies that hauled loads for Convoy, a digital freight brokerage that shut down in October, said the defunct company owes them thousands of dollars for loads they completed.
Before Convoy closed, it had some 80,000 carriers in its network and more than 500 employees. On Oct. 18, Convoy employees told its carriers that all loads were suspended. One former employee told FreightWaves he assumed that a company was going to acquire Convoy, while another believed there was just a temporary outage of the load board.
Instead, the freight brokerage shuttered on Oct. 19. Most of its 500-odd employees were immediately laid off with no severance pay, save for a small team of workers. On Nov. 1, Flexport, a digital freight forwarder, announced it was acquiring Convoy’s technology but none of its liabilities or assets.
Since opening in 2015, Convoy had billed itself as an app that would empower small trucking businesses, including one-person operators and small fleets. Convoy aimed to eliminate waste from the supply chain chiefly through freeing up truck capacity to the market. On that mission, the Seattle-based startup had attracted nearly $1 billion in funding from the big leagues. Such investors included Amazon founder Jeff Bezos, Microsoft co-founder Bill Gates and prominent firms like T. Rowe Price and CapitalG.
That cash seems elusive now. The sudden shutdown has left Convoy carriers scrambling for work during a freight downturn. It’s also left several saying they’re owed thousands of dollars for work completed during the final days that the company existed.
FreightWaves spoke to three carriers that said they’ve been unable to recover payments from Convoy. Each provided documentation to FreightWaves indicating that they had not received payment for loads completed. FreightWaves also spoke to two former Convoy employees who worked with carriers.
A source familiar with the wind-down operations said it was important to Convoy that these carriers were paid. That person added that the reduced workforce remaining with the company after its Oct. 19 shutdown paid the vast majority of carriers. It’s unclear how many total carriers are owed money.
FreightWaves received an automated reply after reaching out to a Convoy human resources email address, which a former employee provided in November to a driver seeking payment. Hercules Capital, Convoy’s lender, did not respond to requests for comment from FreightWaves. Dan Lewis, former CEO and co-founder of Convoy, declined to comment on the record for this story.
“Trucking is core to Flexport’s operations. Every shipment starts and ends on a truck,” a Flexport spokesperson said in an emailed statement. “The acquisition of Convoy’s technology and IP will help Flexport provide more comprehensive services to our customers, and importantly, improve our offering to carriers. Right now our teams are laser focused on relaunching parts of the Convoy platform so we can continue to drive value with carriers and support them through a turbulent market.”
It’s likely that more carriers will find themselves caught between factoring companies and brokerages that aren’t able to pay up during this historic freight recession. In a freight brokerage bankruptcy proceeding, courts may classify carriers as preferred or non-preferred creditors. That determines whether a carrier could receive payment quickly and in full. In the case of Convoy, which never filed for bankruptcy, it’s unclear how or if Convoy will pay carriers with outstanding invoices.
One small business owner says Convoy owes her factoring company nearly $160,000
Biljana Filipov, who owns a small Illinois-based trucking company with her husband, said Convoy owes the factoring company they use almost $160,000. According to a screenshot of a Nov. 2 email reviewed by FreightWaves, the factoring company will start to withhold $1,000 a week from future factoring checks if Convoy does not pay outstanding invoices. A spokesperson for factoring company declined to provide comment for the article.
“If Convoy goes down, we are going down because of them,” Filipov said.
Their small trucking company is called Eagle Radovish. The fleet had nine trucks, or power units, on Convoy’s network, according to a screenshot Filipov provided of her company’s profile on the Convoy website. Eagle Radovish had worked with Convoy for more than three years, landing a 98% on-time score for its work with the carrier, according to the screenshot.
Filipov said all of Eagle Radovish’s loads were canceled immediately on Oct. 18. That same day, her factoring company received its last payment from Convoy for a load completed on Sept. 5. Some loads completed on that date and all loads after that remain outstanding. This information comes from a screenshot of the Convoy app and a spreadsheet of invoices indicating hundreds of outstanding payments, both provided by Filipov.
According to the documents reviewed by FreightWaves, Convoy did not pay Eagle Radovish’s factoring company for 203 loads completed from Sept. 5 to Oct. 18. The total outstanding amount, according to the invoice spreadsheet, is $156,820.97. Filipov said she paid her employees for each job completed.
Eagle Radovish used a factoring company to receive payment for loads. Typically, this factoring company would pay Eagle Radovish within a day of the job’s completion, taking a 2% cut. Meanwhile, the customer of the trucking services would pay Convoy. Convoy would pay the factoring company around 45 days of the load being delivered, according to screenshots viewed by FreightWaves.
Convoy also offered a service called QuickPay. That offered payment within two days for free or same-day payment for a 1.5% cut. Some carriers, like Eagle Radovish, used an outside factoring company. Often, factoring companies require carriers to use them for each broker in their network, even if a more economical or faster-paid option exists.
In weeks after Convoy’s shutdown, Filipov emailed and called the brokerage’s many email addresses dozens of times. She’s sent LinkedIn messages to Lewis, Convoy’s former CEO. Filipov has also contacted the retailers that her trucking company hauled loads for. She said she is considering legal action if Convoy does not pay her factoring company by the end of the year.
Other truck drivers are owed smaller amounts but still feel left in the lurch
Other carriers that spoke to FreightWaves said they were owed for work completed in the final days before Convoy’s shutdown. They were owed a smaller amount because, unlike Eagle Radovish, they used Convoy’s QuickPay service. A former Convoy employee who worked with carriers said most trucking companies opted to use QuickPay.
John Adrian, a small trucking fleet owner based in South Texas, said Convoy owes him thousands. According to screenshots from the Convoy app reviewed by FreightWaves, Adrian’s company is owed around $3,500 for six different loads completed from Oct. 15 to 18.
“We were working with them constantly, two to three loads a day,” Adrian told FreightWaves. “Everything was good.”
Today, Adrian’s truck drivers are hauling for some of the same customers that they had previously. These loads are not as well paid as they were through the Convoy platform. Convoy used to pay $450 for a 250-mile haul of bottled water from McAllen, Texas, to metro San Antonio. Now the same job on another brokerage platform pays just $400. That tallies up to a $6,000 a month difference — a “big loss,” Adrian said.
Steve Seek, an owner-operator in western Maryland, said Convoy owes him $7,700 for loads he hauled in the days leading up to the shutdown, according to communications with a Convoy employee that Seek shared.
Seek used to haul for a slew of brokers until early September, when he joined Convoy’s cohort of drivers on a dedicated route. Following that, Convoy paid him $1,100 per day to haul loads for Sam’s Club, according to documents viewed by FreightWaves. Seek said he typically got his rate confirmation a few days in advance.
It was a good gig until Oct. 18, when Seek had already driven to a distribution center and waited two hours for his next Sam’s Club load. The account manager told him Convoy “had an unexpected situation” with its loads, according to a screenshot of text messages Seek provided FreightWaves. Shortly after that, the account manager told him that all contracts were canceled for the rest of the week.
The next day, Seek saw the headlines that Convoy was shutting down. The account manager did not respond to his texts asking for more information on the Sam’s Club job.
Seek, along with some other truck drivers on Convoy’s dedicated contracts with Sam’s Club, managed to get in touch with a Convoy employee with the job title “transition specialist,” according to text message screenshots viewed by FreightWaves. However, the employee stopped responding to messages on Oct. 24 and did not ultimately secure payment for Seek. Seek has also reached out to a state helpline for small businesses but wasn’t able to reach anyone when he last tried.
Seek said he would like to file a lawsuit against Convoy but, because the company has shuttered, he’s not clear how exactly to do that — and the amount he’s seeking might be too low to justify hiring a lawyer.
Seek has not reached out to Sam’s Club. The bulk retailer, which is owned by Walmart, did not reply to a FreightWaves inquiry on how the company works with brokers and outside carriers.
Seek said he shouldn’t have put all of his eggs in Convoy’s basket. Still, the dedicated haul for the brokerage had steady pay with relatively little overhead. It seemed like decent work for a name-brand broker and shipper. And just 18 months prior to its shutdown, Convoy had raised $260 million in funding, reflecting a valuation of $3.8 billion.
“They were one of the biggest digital freight brokers in the world,” Seek said. “Who would have known?”
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