News / Flexport eyes Convoy's tech – but not its liabilities, as more lawsuits are filed

Photo: Convoy

Flexport, which last month invested in a tech-enabled truck brokerage, is reportedly in talks to buy Convoy’s technology, after the broker shut up shop this month – but another company is also said to be interested.

The move follows Flexport’s hiring of Uber Freight co-founder Bill Dreigert as head of North America six months ago, suggesting the company plans to develop this side of its business. Mr Dreigert was hired during the stewardship of ex-CEO Dave Clark, but unlike other top recruits from this time, appears to have stayed.

According to the WSJ, if it buys Convoy’s technology, Flexport would also bring in a small team from the shuttered company and aim to restore services for Convoy’s drivers and customers.

However, it would not take on any of Convoy’s growing liabilities, it said.

Last week, two class action lawsuits were filed against the brokerage, in Washington and in Delaware, claiming Convoy broke the law by firing staff without a 60-day notice period, as legislated by the Worker Adjustment and Retraining Notification (WARN) Act.

Some 520 people were let go when Convoy ran out of money and the lawsuits are claiming unpaid wages, salary, commissions, bonuses, accrued holiday pay and time off, pension contributions and medical, as well as lawyer, fees.

Last month, Flexport invested in a $6.5m seed round in start-up Zerobroker, which claims to cut out all brokerage fees and manage end-to-end logistics on its platform. Ullas Naik, general partner at fellow investor Streamlined Ventures, said the freight industry was “still far behind in terms of technology adoption and innovation”.

That may be true, but observers say technology needs to be combined with the human touch. The real question for Flexport will be whether it can succeed where Convoy, which attracted large amounts of VC cash and good customer growth rates – but a poor financial performance – failed.