Convoy Inc., a digital freight brokerage company, experienced a dramatic downfall from a valuation of approximately $3.8 billion in the first quarter of 2022 to going out of business in a little over 18 months. Most of its employees were laid off without severance, reflecting its financial difficulties. The company struggled with dwindling freight demand and rates, as well as a surge in the cost of capital, making it harder to secure funding. Co-founders Dan Lewis and Grant Goodale were technology-focused but lacked trucking or freight experience, and their “build it and they will come” approach did not work in a competitive market with many experienced brokers.
Convoy had trouble managing costs and pricing its services profitably, even when rates were relatively high. It attempted to offset per-load losses with higher volume, but this approach was more suited for the less-than-truckload segment of trucking, not the point-to-point truckload business. Additionally, Convoy’s focus on owner-operators left them out of a significant portion of the load generation, and delayed payments from shippers impacted the company’s cash flow.
Read the full story at FreightWaves here.
The #1 Factor of Transportation Success is the Shipper-Broker Relationship.
The closure of Convoy has been one of the biggest stories in both tech and freight media over the past week. Alongside market challenges and over-reliance on technology is the most recent reminder that technology and low cost alone can’t replace the importance of the broker-shipper relationship, even in a competitive market.
Understanding a shipper’s unique needs, product makeup, customers, and delivery details, whether retail products or temperature-sensitive goods, hazardous materials, or oversized cargo, each comes with its own set of service nuances.
By staying attuned to these specifics, a broker can add value beyond the cost of the freight, instilling trust with shippers and their end customers.
If your current transportation broker isn’t focused on building a relationship with you that drives value to your supply chain, perhaps the Legacy team can help.
