CHATTANOOGA, Tenn. — Despite one of the most unprecedented downfalls in transportation and logistics history, Convoy Inc.’s ultimate legacy is that it shook up the freight industry by bringing technology innovation and investments into the space.
Seattle-based startup digital freight broker Convoy announced it was shutting down operations due to the “massive freight recession” in an Oct. 19 letter to employees.
“I would argue that many people in this room would not be afraid if it hadn’t been for what Convoy triggered, which was investment-class venture capital pouring into the space,” FreightWaves CEO and founder Craig Fuller said during the F3: Future of Freight Festival on Tuesday. “What’s interesting about it is it’s not just the venture capital-backed companies, but it’s the way that the incumbents were forced to respond, that a J.B. Hunt … was certainly a company that built arguably the most successful digital platform and it was in large part a response to some of the competitive interest that the startups were getting.”
FreightWaves second annual F3: Future of Freight Festival brings together experts, entrepreneurs, industry leaders, educators and more to discuss the key factors impacting freight markets and the latest trends pushing the industry forward. The event in Chattanooga, Tennessee, continues through Thursday.
Fuller was part of a fireside chat discussing Convoy’s legacy and impact on the freight industry. He was joined onstage by FreightWaves’ JP Hampstead and Liz Ward, head of Zebox America.
Convoy was founded in 2015 by Amazon veterans Dan Lewis and Grant Goodale. The company went from a valuation of approximately $3.8 billion in the first quarter of 2022 to being out of business in a little more than 18 months.
“I would say [Convoy’s legacy] is really positive,” said Ward, who worked as the digital freight brokerage’s director of business development from 2016 to 2018. “I think they were very pioneering in so many ways for this entire space. They built great technology, they upgraded the conversation. We wouldn’t be talking about half the stuff we are talking about now. They made it interesting, they gave us all sorts of businesses spun out of different concepts of Convoy.”
Ward said what attracted her to joining Convoy in 2016 was the company’s cutting-edge approach to the freight market.
“At the time I was working for trucking and Dan Lewis called me. … He said, ‘I’m building the best trucking company in the world, come join me,’” Ward said. “I remember sitting down with Dan. I said, ‘What makes you so different from every other broker out there?’ He said, ‘My engineers.’ I think that was a really good pivotal point in trucking, thinking through the engineering aspect of the business and automation and how powerful that can be to the industry at large.”
Hampstead, who conducts research on multimodal freight markets for FreightWaves, said Convoy brought new levels of cutting-edge technology and talented minds to the freight industry.
“One of the legacies is bringing a certain level of professionalism in town and tech talent into the industry, especially if it’s a brokerage, and showing transportation providers how to lead with technology products,” Hampstead said.
Convoy’s ultimate demise may have lain in focusing too much on technology while overlooking its longtime business model and how it could react to a volatile market, the panelists said.
“The industry has said that one of the big sorts of complaints or issues they had with Convoy’s business model … was the fact that in the earliest days of the business, it was essentially buying market share. Did you see that, where they were undercutting the other providers in the market?” Fuller asked Ward.
Ward responded that she was focused on business development and account management growth during her time at Convoy.
“We were really dialing into that, like, ‘we will be your ultimate backup option, whenever your primary secondary carrier fails, we’re there,’” Ward said. “We would take on a lot of freight that probably wasn’t the best freight to take on. There was a reason why it was being rejected by all sorts of carriers. That was one way that we were able to kind of grow our wallet, grow our share with these customers. It was good and bad. It was good for early on, but where we maybe went wrong was trying to be rectified with more than contract rates to spot.”
Hampstead said while Convoy is gone, the freight industry might not have seen the last of the pioneers behind the company.
“I hope that Convoy veterans go on to found more companies,” Hampstead said. “I hope that there’s a second wave, maybe a Convoy mafia. Normally, those follow successful exits, but we’ll see what happens.”
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