Image Credits: Convoy

Supply chain logistics platform Flexport is buying the property of shuttered digital freight community Convoy, in line with a memo Flexport CEO Ryan Peterson despatched to employees Wednesday.

Flexport will restore Convoy’s trucking logistics companies for patrons within the coming weeks, reads the memo, shared by Freight Waves. Peterson mentioned Flexport gained’t purchase the enterprise or any of its liabilities, however does plan to retain “a small group of team members from their core product and engineering team.”

Convoy co-founder and CEO Dan Lewis could be one of many staff members becoming a member of Flexport, studies the Wall Street Journal, citing an individual accustomed to the settlement. Lewis didn’t reply to TechCrunch to verify.

The phrases of the deal weren’t disclosed, however Peterson mentioned in his memo that “the purchase price relative to value is modest.” In April final 12 months, Convoy was valued at $3.8 billion after a $260 million Series E spherical.

Flexport couldn’t be reached for remark.

Peterson additionally famous that Flexport’s bills “will be limited to what’s necessary to maintain the tech.” When Peterson took again the CEO title in October after his successor was pushed out, the manager’s massive message was about getting Flexport’s funds again so as. He had criticized former CEO Dave Clark for overspending on hiring and enlargement. Since stepping again into the CEO function, Peterson has overseen a plan of price slicing, together with laying off about 20% of its workers, or round 600 individuals.

With that price slicing additionally comes a necessity for Flexport to claw its means again to profitability, and providing a greater service is a technique to try this.

“We made today’s acquisition not just because of the incredible tech stack that Convoy built,” wrote Peterson. “We have heard from our customers that they want Flexport to be a one-stop shop for all their logistics needs.”

Convoy’s buyer base could possibly be a boon to Flexport’s service, as properly. The once-promising startup boasted greater than 400,000 truck drivers and 80,000 carriers in its community, and its tech stack contains “sophisticated procurement technology that fully automates the supply side for 98% of loads booked,” mentioned Peterson. He famous the tech may assist Flexport decrease service prices.

Peterson additionally laid out how Flexport will strategy the enterprise otherwise than Convoy and different giant truck brokerages which have targeted on scaling rapidly by pursuing massive Fortune 500 accounts. That kind of scale led to complexity and burn, says Peterson, which made it tough for Convoy to show a revenue. Convoy’s working place additionally was hit by the present freight recession.

In the long run, Flexport will supply a full vary of trucking companies to clients, “including FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services to customers of our international freight forwarding services,” mentioned Peterson.