A penny stock wiped $4.8B off C.H. Robinson's market cap yesterday. Plus: self-driving trucks are now running 1,000 miles nonstop, STG Logistics cleared a major bankruptcy hurdle, the FMCSA revoked nine ELDs, and more.
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Today's feature explores the unexpected shutdown of Convoy, shedding light on its impact and ripple effects across the freight industry from its founding to the present.
Happy Friday. We mistakenly sent an email earlier that was intended to be a blog post, so we apologize for sending two emails this morning. Today's feature explores the unexpected shutdown of Convoy, shedding light on its impact and ripple effects across the freight industry from its founding to the present. Additionally, we cover Transfix's $40M Series F funding amidst market challenges and provide insights from Reliance Partners into the evolving logistics landscape, plus more.
Today's Newsletter is Brought to You By AscendTMS (TheFreeTMS.com)
In today's email:
Three Freight Headlines: Freight brokerage growth dips, Transfix secures $40M funding, & Reliance discusses industry challenges
The Rise, Fall, & Legacy of Convoy
Around the Freight Web: From forklift driver to CEO, Knight-Swift drives U.S. Xpress turnaround, Port of Long Beach sets record, and more.
Freight Meme of the Day
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🐔 WHAT’S COOKIN’ IN FREIGHT
📉 Freight Brokerages See Biggest Drop Since 2014. The number of operating freight brokerages has experienced its most significant decrease since a notable dip in 2014, with growth rates turning negative from July 2023. By October 2023, the count of active and authorized brokerages decreased by 5.6% compared to the same month in the previous year. This decline follows a period of rapid expansion during the pandemic. This information was shared by Kevin Hill from Brush Pass Research.
💰 Transfix Raises $40M Amid Freight Market Turbulence. Transfix, a digital freight platform similar to Convoy, has successfully secured $40 million in Series F funding. However, this triumph is overshadowed by a stark 60% devaluation from its March 2020 valuation, reflecting the challenges in the venture capital and freight markets. Social media is rife with skepticism.
🚚 Reliance Partners' Insights. Amidst Convoy's surprise departure, Reliance Partners' Chad Eichelberger offers insights, highlighting the industry's need for a unified voice against stringent shipper demands and emphasizing the importance of firm contracts, carrier vetting, and understanding insurance. With peak motor carrier cancellations observed in May, there's a noted 20% dip in freight brokerage revenue.
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The Rise, Fall, & Legacy of Convoy
Convoy CEO confirms company closure amid market stressors.
Convoy, with a valuation of $3.8 billion and led by ex-Amazon and Microsoft executive Dan Lewis, has stunned the freight world with its unexpected shutdown. Lewis cited a devastating "freight recession" and intense "monetary tightening" as significant hurdles. Describing the situation as the "perfect storm," he recognized Convoy's revolutionary efforts in an emotional memo, asserting its indelible mark on the industry despite present circumstances.
Inception and Disruption
Dan Lewis and Grant Goodale's experience at Amazon inspired Convoy's founding in 2015. Initially catering to the Puget Sound region of Washington, their ambition blossomed into an industry-changing mission to offer endless capacity with zero waste. By creating an Uber-esque platform for truckers and shippers, Convoy was determined to overhaul traditional brokerage with tech-centric solutions.
Fund Raising & Growth
Starting as a local entity in 2015, Convoy experienced exponential growth:
2016: Bagged $2.5 million seed funding, initiating full-truckload shipments.
2017: Garnered $62 million Series B funding, providing nationwide services.
2018-2022: Multiple service launches and funding rounds culminating in a $260 million late-stage injection in April of 2022.
By 2023, Convoy had solidified its presence across the U.S., collaborating with a vast network of carriers and serving a broad clientele spectrum. High-profile investors, including Cascade Investment and renowned figures like Jeff Bezos and Bono, bolstered Convoy's reputation, drawing various stakeholders to its platform.
In April 2022, Convoy closed a Series E round of $260 million with a $3.8 billion valuation. Source: CB Insights.
Turbulent Times and Obstacles
Despite its innovation-driven ascent, Convoy faced significant challenges. The company underwent multiple rounds of layoffs, the latest in 2023, mainly impacting the customer service segment. The move was a response to increasing efficiency demands and a freight market downturn.
The recent amicable settlement of a dispute with OTR Solutions, placing Convoy on a "Do Not Buy" list, hinted at financial troubles. The freight industry's evolving dynamics, with shippers preferring private fleets, adversely impacted the brokerage sector.
The Closure and What Lies Ahead
With Convoy's downfall and closure, digital freight brokerage companies are likely to see their 2022 valuations get crushed, just as we already observed with Transfix in their Series F round. Source: CB Insights.
Convoy's closure became official when sale negotiations fell through. Lewis revealed that despite extensive efforts to find potential buyers, none met Convoy's expectations for continuing its legacy. However, there's a glimmer of hope as significant logistics entities, such as Maersk and UPS, show interest in Convoy's cutting-edge tech stack. A dedicated team will manage Convoy's winding down and potential future strategies.
Convoy’s Legacy
Matt Silver, reflecting on Convoy's journey, pointed out the transformative role the company played in blending freight and tech. Despite the criticisms of their business model, Convoy's innovative approach forced traditional freight brokerages to upgrade their tech game. The company's driver app revolutionized driver-brokerage interaction, offering a glimpse into the future of digital freight operations. Furthermore, Convoy attracted tech talent, infusing fresh perspectives into an age-old industry.
Reed commented that Matt Silver's tweet was the most thoughtful he had seen. Read Matt's entire tweet by clicking here.
The Downfall
A former Convoy employee chimed in on X.
Despite the immense backing and visionary approach, profitability eluded Convoy. Senior Logistics Executive, Dean Sinadinoski, opinedthat the company's aggressive tech development, funded by outside investors, led to overspending on employee compensations. With no profit in sight and substantial losses on each transaction, Convoy faced the inevitable – a downfall, leaving the investors and shareholders bearing the brunt.
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AROUND THE FREIGHT WEB
👏 Forklift Certified CEO. The new CEO at Costco started as a forklift driver. Talk about climbing the corporate ladder over four decades.
🚛 U.S. Xpress Turnaround. Knight-Swift Transportation is acing the USX turnaround game. The company's 45% spot exposure plummeted, and they're setting their sights on a 2024 profit.
🚢 Record-breaking September at Long Beach. Thanks to holiday shopping and new labor agreements, the Port of Long Beach hits its busiest September, with cargo volumes spiking.
🚪Closed Doors for CFL. After a 95-year journey, the family-owned trucking and brokerage company, Certified Freight Logistics is shutting down.
🛍️ Retail Rises & Surprises. September retail sales beat the odds, soaring to a 0.7% monthly growth, dwarfing the Dow Jones estimate.
FREIGHT CONFERENCES WE'RE ATTENDING
Many enterprise shippers will be attending Manifest this February in Las Vegas. Use our link for a $200 discount.
Feb. 5th-7th, 2024: Manifest Vegas, February 5 - 7, 2024, is the world's largest global supply chain & logistics tech event, bringing together Fortune 500 global supply chain executives, logistics service providers, cutting-edge startups, venture investors, and technology leaders. Join 4,500+ supply chain innovators to foster new strategies and relationships. Receive $200 off your ticket with our exclusive link.
November 7th-9th, 2023: F3, taking place in Chattanooga, TN November 7th-9th. The heart of Freight Alley and home to FreightWaves—will come alive once again with the largest festival in freight November 7-9, 2023. Bringing together experts, entrepreneurs, industry leaders, educators and more to discuss the key factors impacting freight markets and the latest trends pushing our industry forward. Receive $500 off your ticket with our exclusive link.
FREIGHT MEME OF THE DAY
Also, check out:
🎧 The FreightCaviar Podcast. Listen to this week's podcast on Spotify & Apple Podcasts.
☕️ FreightCaviar Fall Essentials: purchase a FreightCaviar sticker, hoodie, long-sleeve, or mug by clicking here. Use code FC10 to receive a 10% discount.
🤝 Master the essentials of freight brokering with Freight360's comprehensive online course, tailored for both aspiring brokers and current agents looking to enhance sales and operations. Receive $150 off your course with our code FREIGHTCAVIAR. Click hereto learn more.
I’m Adriana, a writer and editor at FreightCaviar. I’ve covered everything from freight tech to industry lawsuits and market shifts, helping scale us to almost 14K subscribers. My goal: to make logistics stories digestible, clear, and fun to read.
A penny stock wiped $4.8B off C.H. Robinson's market cap yesterday. Plus: self-driving trucks are now running 1,000 miles nonstop, STG Logistics cleared a major bankruptcy hurdle, the FMCSA revoked nine ELDs, and more.
In just three years, we have moved from an industry that relied heavily on manual phone calls and emails to one where many of us use AI to some extent to support the above.
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