With Convoy coming of age during a low interest rate environment, many businesses were venture funded. A load bringing in $300 in net revenue in 2020 and 2021 is likely down 50% in 2023. Convoy’s model was initially based on building density in critical lanes. In 2019 it focused more on improving profitability. The pandemic delayed those efforts. But by late 2020 and into 2021 it had reduced its operating expenses by 50%.
Another factor was the profile of Convoy’s shipper base. Frequent users of the platform were large brands with big spending. They often had payment terms stretching out 90 to 120 days, whereas Convoy had to pay carriers within a matter of days after the loads were delivered. The receivables squeeze put a hit on Convoy’s cash flow, according to the executive.
“You pushed us to see technology differently,” Lars Ward, VP of business development at digital logistics startup FreightVana, posted on LinkedIn last week. “The need for better freight tech is huge and Convoy was chasing a vision” to better connect freight to carriers.