On Thursday, Convoy announced that it will be ceasing its operations. Just 18 months ago, Convoy secured $260 million in funding, valuing the company at $3.8 billion. This decision follows closely on the heels of another supply chain software startup, Flexport, which recently announced plans to lay off approximately 20% of its workforce.
Convoy cited a “massive freight recession” as the primary reason for shutting down its operations. Based in Seattle, Convoy was established with the aim of revolutionizing the fragmented, low-tech freight brokerage industry, which traditionally relied on phone and fax for connecting truckers and customers. Prior to this announcement, Convoy had around 500 employees.
The company’s fortunes had shifted since the peak of supply chain issues and demand spikes during the COVID-19 pandemic, which had initially favored Convoy’s on-demand technology. However, as trucking rates returned to normal, this advantage waned. Over the past year, like many other startups in the freight sector, Convoy had undergone multiple rounds of layoffs and had even closed its Atlanta office.
Despite the challenges faced in 2022, Convoy had managed to secure $260 million in new capital from investors led by the UK-based Baillie Gifford and Hercules Capital. Additionally, JPMorgan had extended a $150 million line of credit to Convoy, resulting in a valuation of $3.8 billion just 18 months ago.
Convoy is under the leadership of co-founder and CEO Dan Lewis, a former executive with experience at Amazon and Microsoft. In a memo to employees, Lewis explained that the company had been hit by both an “unprecedented freight market collapse” and “dramatic monetary tightening.” He described it as a “perfect storm” that had derailed the company’s progress.
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