IKEA vs Convoy – a genius lawsuit

Jennifer Morris writes:

What’s going on?

In case you live under a rock or don’t work in the logistics world, here is a quick breakdown of what is going on. Convoy raised close to 1B from investors and in 2022 was valuated at 3.8B, everyone thought things were going great for them until late in 2023 when they just closed their doors with little to no warning. Leaving carriers, employees, and investors unpaid and in the dark about what happened. Fast forward to early 2024 and Flexport announces they have resurrected Convoy and claim to have launched with 200 shipments their first day. This raised many questions and concerns about how the tech, data, and leadership from Convoy ended up in Ryan Petersen’s hands.

Explanation of lawsuit

The lawsuit basically is Ikea looking for guidance on who to pay. I know, weird, right? A company is suing for clarity on who to give money to. Ikea has listed Convoy, Hercules Capitol (who loaned Convoy money), Convoy’s subcontracted carriers and associated factoring companies in the lawsuit. Based on the shipper agreement between Convoy and Ikea, Ikea believes that Convoy has not fulfilled their obligations (paying the carriers) so they are refusing to pay Convoy. For a clear breakdown of the lawsuit, I suggest this article by Alex Lockie on OverDriveOnline.com.

Why This is a Smart Move by Ikea

1) Ikea looks like the good guy trying to pay the parties that actually did the work. Currently, to people inside and outside the industry, Ikea is looking like a white knight coming in to help ensure carriers are getting paid. It’s a great look for them and they are currently getting to steer the narrative the way they want it.

2) Ikea potentially avoids being named in multiple payment lawsuits by taking the offensive. Multiple lawsuits could be filed against Ikea by the carriers that completed the shipments in question. By going on the offensive like this, Ikea is showing intent to pay and may avoid having to manage many lawsuits down the road (I am not a lawyer but this seems to be the consensus).

3) Ikea gets a bunch of free positive press. Ikea is getting free coverage due to the lawsuit. While Flexport engages a lot with the media with generally positive results, it would be hard for Flexport to paint Ikea as the bad guy here. The more people that write about it (like me) the more people will see that Ikea is trying to “do the right thing”. And to many consumers that is important…

The full post is here.