- The collapse of digital brokerage Convoy was the main discussion at the first panel of the Investing in the Transportation & Logistics Industry Conference.
- Panelists recognized Convoy’s innovative technology, but they highlighted several reasons for its downfall, including lack of capacity, rapid expansion without adequate discipline, and failure to adapt quickly to market changes.
The shocking collapse of the venture capital-funded Convoy, once valued at more than $3 billion, dominated discussions at the recent Investing in the Transportation & Logistics Industry Conference. The logistics industry executives gathered for the event dissected what led to the downfall of the former digital freight pioneer.
One of the realities identified was Convoy’s limited capacity. Doug Waggoner, the CEO of Echo Global Logistics, shared his firsthand experience with Convoy and described its technology as “very good, I would even say gold-plated”. However, he noted Convoy’s strength was in “short-haul regional freight” and did not have the capacity to compete with big carriers. In contrast, Waggoner’s company, Echo Global, focuses on larger carriers, which he says provide the best pricing.
The panelists also painted a picture of a company that expanded rapidly with venture capital, but lacked the discipline to manage this growth effectively. Kendra Tucker, the CEO of Truckstop, pointed out that third-party logistics providers excel because of disciplined business operation, which was lacking in Convoy. Tucker also pointed out that Convoy received a surge in funding between 2017 and 2022, a period when “transportation became quite sexy” for venture capitalists.
Another key factor leading to Convoy’s downfall was its failure to adapt quickly to market changes. Tobenna Arodiogbu, the CEO of CloudTrucks, mentioned Convoy’s inability to quickly cut research and development costs when markets softened as an example of its lack of discipline.
Despite the demise, Convoy is credited for forcing technological advancements in the logistics industry. According to Arodiogbu, Convoy’s presence in the market forced competitors to invest more aggressively in technology, benefiting the entire industry. However, Waggoner suggested that Convoy’s technology was not unique and that similar capabilities exist in other technologies.
