Digital Freight Broker Convoy Shuts Down Its Core Business

In October 2023, Convoy, the Seattle-based digital freight brokerage backed by investors including Bill Gates and Jeff Bezos, closed its core business operations. Operations halted abruptly on Wednesday, October 18, and CEO Dan Lewis told employees in a memo the next morning that the company was closing its core business.

The memo

"We hoped this day would never come," Lewis wrote. "We spent over 4 months exhausting all viable strategic options for the business. However, none of the options ultimately materialized into anything sufficient to keep the company going in its then current form."

He blamed two forces. "In short, we are 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."

Lewis said staff had been working to make sure all in-transit shipments reached their destinations. A small team would stay on to handle the wind-down and "potential future strategic options."

Rise and fall

Founded in 2015 by Lewis and Grant Goodale, Convoy used an app-based system and machine learning to match carriers with shippers' loads. In April 2022, it announced $260 million in new funding at a $3.8 billion valuation, and Logistics Management reported that the company had raised more than $900 million in total. In that 2022 announcement, Convoy said it had 400,000 trucks on its marketplace.

Layoffs began in June 2022 and continued through 2023, GeekWire reported, taking staff from a peak of about 1,500 to about 500. Goodale stepped down as chief experience officer in June 2023.

Market conditions

Analysts pointed to a market that had turned against brokers. Avery Vise of FTR Transportation Intelligence told GeekWire that plentiful truck capacity let shippers find attractive rates with large asset-based carriers rather than the smaller trucking companies Convoy targeted. Tim Denoyer of ACT Research said he was seeing shippers move loads to their private fleets.

"Even digital freight brokers such as Convoy with leading tech are not immune from the overall spot-market declines in rates and volumes," Evan Armstrong, CEO of Armstrong & Associates, told Logistics Management. "It has been looking for additional funding/investment, but with high interest rates, a lot of financial investors are on the sidelines."

What it means for drivers and fleets

Convoy's model was built around small carriers and owner-operators, so its October 2023 shutdown removed a source of loads for many of them during a weak spot market. Those carriers had to replace that freight through other brokers, load boards or direct shippers. The collapse was also a reminder for small fleets to spread their business across several freight sources and to check the financial footing of any broker before depending on it.