News / 1,000 jobs lost as Convoy closes in 'perfect storm of recession and contraction'

Photo: Convoy

US freight brokerage Convoy today confirmed it is closing its operations and making its staff, thought to number about 1,000, redundant.

A letter to staff from Dan Lewis, CEO and co-founder, notes “today is your last day at the company”.

He said: “As you’re all aware, over the past few days we’ve been taking actions to minimise disruptions to shippers and carriers by ensuring that all in-transit shipments get to their proper destinations … With that action nearing completion, Convoy will be closing down its current core business operations.”

He wrote that some staff would stay on to handle the wind-up and “potential future strategic options”.

Mr Lewis said: “We hoped this day would never come. We spent over four months exhausting all viable strategic options for the business. However, none of the options ultimately materialised into anything sufficient to keep the company going in its current form.”

Mr Lewis said the closure was down to “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.”

But he argued that the tech-centric approach had created real benefits, and the “conditions for a truly scalable technology platform and business model that would have yielded real financial gains when market conditions improve. But in the end, market forces were too strong for us to withstand on our own…we were running up the down escalator…. and it kept speeding up.”

He added that funding had dried up – as had M&A opportunities.

“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.”

Convoy would be “evaluating strategic options” said Mr Lewis as he thanked his “incredible” staff for their “amazing work”.

“The work you’ve all done will leave its mark on the freight industry for ever. This industry needs to modernise. Shippers want it, carriers want it and the market wants it. We still believe that this will be the future for this industry.”