Flexport Acquisition - a well-known logistics giant that just collapsed

Six months ago, Flexport hired Uber Freight co-founder Bill Dreigert as head of North America, a sign that the company has plans to grow in this area. Dreigert was hired during the tenure of former CEO Dave Clark, but unlike other high-level hires during this period, he was able to stay on.

According to the Wall Street Journal, if Flexport buys Convoy's technology, it will also hire a small team from the defunct company aimed at reviving services for Convoy's drivers and customers. It's unclear how much of the tech stack Flexport will acquire, but people familiar with the matter said the company will not acquire any physical assets of the fleet, such as the towing fleet. However, Flexport will not take on Convoy's mounting liabilities, the report said.

The Wall Street Journal previously reported that if the deal goes through, Flexport "will plan to resume Convoy's freight service for as many customers and partners as possible."

Last week, Washington and Delaware filed two class-action lawsuits against cargo forwarding company Convoy, accusing the company of firing employees without a 60-day notice period, In violation of the Worker Adjustment and Retraining Notification Act.

About 520 people were laid off when Convoy's cash flow ran out, and the lawsuits seek payment of back wages, salaries, commissions, bonuses, accrued vacation pay and leave, pensions, medical expenses, and attorneys' fees.

Last month, Flexport also invested $6.5 million in a seed round of funding for startup Zerobroker, which claims to cut all brokerage fees and manage end-to-end logistics on its platform. Ullas Naik, managing partner at investor Streamlined Ventures, said the freight industry is "still far behind in terms of technology adoption and innovation."

That may be true, but observers say technology needs to be combined with human services. The real question for Flexport is whether it can succeed where Convoy has failed. Convoy attracted a lot of venture capital and had good customer growth, but its financial performance was poor.

The exact details of the acquisition are unclear, but sources said the deal would be "beneficial" for Flexport. FreightWaves reported last week that two large trucking companies are considering acquiring Convoy's technology stack. The Seattle Times previously reported that Convoy had found a buyer, but sources declined to say who it was. The Wall Street Journal first reported on Friday that Flexport was in talks to acquire Convoy.

Convoy declined to comment on a potential Flexport acquisition.

In fact, Convoy and Flexport have had a long-term strategic partnership since at least 2021. To automate end-to-end transportation on land, sea and air. The partnership will leverage Flexport's international customer base and Convoy's North American carrier network to provide customers with seamless logistics services, while seamlessly integrating freight across the two platforms through a new shared data exchange, expanding both companies' business capabilities.

Flexport, meanwhile, has had a troubled year of its own. The trucking company's board fired then-CEO Dave Clark in September. Since then, Flexport founder Ryan Petersen has returned as CEO and overhauled the company, laying off many of the employees hired during Clark's tenure. On September 14, it was reported that Flexport's revenue for the first half of 2023 was down 70%.