Digital freight startup Convoy has announced the suspension of its operations and the winding down of its core business.
The company, which was founded by former Amazon executives and which has attracted money from prominent tech investors, is now exploring alternatives that may include selling its technology.
Last year, Convoy raised $260 million in a funding round, valuing the business at $3.8 billion. However, the company has been adversely affected by the decline in freight demand over the past year. As a result, Convoy has decided to suspend operations, according to a report Wednesday (Oct. 18) in The Wall Street Journal (WSJ).
In an email sent to its employees, Convoy stated that it would no longer accept shipments until further notice. Existing loads are being rescheduled or canceled. The company is now considering various options, including selling off teams, software or intellectual property.
Convoy has been a major player in the digital freight industry, providing a platform that matches loads to available trucks. Its roster of customers included companies like Home Depot, Procter & Gamble, Unilever and Anheuser-Busch. The company’s success has been bolstered by early investments from figures such as Bill Gates, Jeff Bezos, Al Gore, and even U2 lead singer Bono and guitarist The Edge, WSJ said.
Digital freight startups like Convoy have emerged over the past decade with the goal of revolutionizing the freight marketplace and enhancing efficiency. These companies have gained traction in shipping markets, particularly during disruptions caused by the pandemic, WSJ said. However, the industry as a whole has faced challenges due to declining shipping demand and plummeting freight rates.
Flexport, a digital freight startup focused on the international market, has been striving to return to profitability as falling freight rates have impacted its financials.
As PYMNTS reported recently, the startup has seen a string of departures in its leadership roster. In September, Chief Financial Officer Kenny Wagers and Jennifer Boden, vice president of people tech and employee experience, both stepped down from their posts.
Peterson has set his sights on profitability by late 2024 or early 2025, with a potential IPO in the works.