SEATTLE — Seattle-based trucking software company Convoy is shutting down.
In a memo to employees sent on the morning of Thursday, Oct. 19, Convoy CEO Dan Lewis detailed the decision to cease operations.
“As you’re all aware, over the past few days we’ve been taking actions to minimize disruptions to shippers and carriers by ensuring that all in-transit shipments get to their proper destinations,” Lewis wrote. “Thank you to everyone who stayed focused and got it done. As usual, you guys do amazing work. With that action nearing completion, Convoy will be closing down its current core business operations. Some of our team will continue on to handle this windup transition and potential future strategic options (all whom have already been spoken with), today is your last day at the company.”
Lewis said he had hoped “this day would never come,” adding that “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. So, what happened? 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.”
Convoy currently employs 500 workers, down from a peak of about 1,500. The company had raised raised $260 million at a $3.8 billion valuation just 18 months ago, but those who were laid off reportedly didn’t receive any severance packages.
In his memo, Lewis said that Convoy’s tech centric approach to trucking created “real benefits.”
“It also created the conditions for a truly scalable technology platform and business model that would have yielded real financial gains when market conditions improve,” he wrote. “But in the end, market forces were too strong for us to withstand on our own.”
Lewis said the company “moved all business levers possible. But we were running up the down escalator…. and it kept speeding up. So despite your excellent work on our product and service innovation, extensive revenue driving efforts, and the painful and sweeping cost cuts you have had to endure, it was still not enough to get us into the financial position necessary to withstand the increasing pressures of the industry, without the need for outside funding.”
Lewis added that “Alongside this unprecedented freight market collapse, the dramatic monetary tightening we’ve seen over the last 18 months has dramatically dampened investment appetite and shrunk flows into unprofitable late stage private companies. Add to that, amidst these freight and financial conditions, M&A activity has shrunk substantially and most of logical strategic acquirers of Convoy are also suffering from the freight market collapse, making the deal doing that much harder. The perfect storm.”
Lewis said that the company explored all viable strategic options for the company over the past several months, but “the result sult is where we are today. Convoy is closing the doors on its current core business operations and exploring and evaluating strategic options for what might come next.”
Lewis went on to praise his company’s workers.
“The work you’ve all done will leave its mark on the freight industry forever,” he said. “This industry needs to modernize. Shippers want it, carriers want it, and the market wants it. We still believe that this will be the future for this industry. As I just shared on our call, I think the world of you. Over the past few months I experienced some of the highest highs and lowest lows in business, but throughout it I remained motivated because of the incredible people at Convoy who gave me inspiration every day. You guys rock.”
Born in Pine Bluff, Arkansas, and raised in East Texas, John Worthen returned to his home state to attend college in 1998 and decided to make his life in The Natural State. Worthen is a 20-year veteran of the journalism industry and has covered just about every topic there is. He has a passion for writing and telling stories. He has worked as a beat reporter and bureau chief for a statewide newspaper and as managing editor of a regional newspaper in Arkansas. Additionally, Worthen has been a prolific freelance journalist for two decades, and has been published in several travel magazines and on travel websites.