Convoy saw record activity last month on its digital freight network as the COVID-19 outbreak spread and shipper demand soared across industries including beverage, food, retail, and Consumer Packaged Goods (CPG). But other sectors have largely shut down amid the economic stall, reducing the need for its service that facilitates transactions between trucking companies and shippers.
There are a lot of moving pieces in Convoy’s world, but CEO Dan Lewis is relying on the company’s technology to help the keep the engines running at the Seattle startup.
“As we face what will be a challenging recessionary period, all businesses are trying to be as efficient as possible in order to drive cost savings, and that’s where Convoy consistently delivers for carriers and shippers,” he told GeekWire via email. “Efficiency is our mission, and it’s hard to think of a more important time to be good at what we do best.”
Convoy is a rare unicorn in Seattle, one of a handful of privately-held companies valued at more than $1 billion. It is No. 5 on the GeekWire 200, our ranking of top Pacific Northwest startups. Convoy raised $400 million at a $2.7 billion valuation this past September.
Much has changed since then, and particularly in the past few months as the novel coronavirus crisis forces companies to curb expenses and adapt.
Many of Convoy’s customers are some of the largest remaining active shippers that deliver essential goods, helping boost its business in recent weeks. Customers include Fortune 500 companies such as Anheuser-Busch, Home Depot, Procter & Gamble, Wayfair, Land O’ Lakes, and Unilever.
“COVID-19 initially put extraordinary pressure on the U.S. supply chain with some economists comparing it to a bank run but on consumer goods,” Lewis said. “The supply chain has responded extraordinarily well, largely due to the heroic actions of individual truck drivers and workers at factories and warehouses.”
But while big box retailers need to continuously restock shelves, many other shippers have seen business evaporate.
Convoy is also dealing with a trucking industry facing 4-year-lows in freight demand, Lewis said. Spot rates are expected to drop more than 20% in April and May from March, said Tim Denoyer, a vice president at ACT Research. The ports of Seattle and Tacoma saw a 12% drop in cargo volume last month, according to The Northwest Seaport Alliance.
The economic crisis is hurting pay for truckers, who were praised by President Trump last week and considered essential workers as they risk their health delivering critical supplies on the frontlines of the pandemic.
“Freight industry layoffs had already been increasing for much of 2019 and many carriers were already operating at thin margins, which means that many are now facing the choice of whether to continue running at low-rates or to stop operating for several weeks,” Lewis noted.
Convoy aims to increase earnings for truck drivers while simultaneously reducing cost for shippers by removing inefficiencies in the existing supply chain. Truck drivers download Convoy’s free app to find work without going through brokers who typically use emails and phone calls.
Lewis, who started Convoy with CTO Grant Goodale after they left Amazon in 2015, hopes to get an edge over competing brokerages by offering a more streamlined service.
“This is especially valuable to shippers during a downturn when they need to find efficiencies and save money while still competing to win and grow their own business with great freight service,” he said. “This is also valuable to carriers who can’t afford to run empty miles and who need convenient, fairly priced work to keep earning as the market shifts.”
Gartner reported earlier this month that digital freight platforms can help with “current domestic transportation capacity challenges.”
Convoy is pulling back on aggressive hiring plans due to the pandemic, though it still has more than 30 open roles. Convoy laid off less than 1 percent of staff and is reshuffling its recruiting team to different parts of the company, which employs more than 800 in Seattle and Atlanta. Lewis said the company will continue to grow and invest in its tech platform and customer-facing roles.
The largest U.S. freight broker, C.H. Robinson, is cutting executive salaries for three months.
Internally, Lewis said Convoy has doubled down on clear and consistent communication with employees “to ensure that everyone is brought along with our thinking and our decisions in real-time.” He’s also in constant contact with other logistics and supply chain leaders.
“This is an unprecedented time for Convoy employees and everyone we interact with,” he said. “I’ve often asked myself, ‘as we get bigger how can we feel smaller?’ Now the question is, ‘as we spread out how can we feel more together?’”
Convoy this week announced that it has helped prevent more than 1.7 million pounds of carbon emissions from being emitted. The company’s Automated Reloads technology uses machine learning to group full-truckload shipments for carriers and is helping reduce “empty mile” emissions.
Last week it debuted a new program to help food banks across the U.S. It will pay trucking costs for any company that donates a truckload of supplies.
Earlier this month Goodyear expanded its partnership with Convoy, opening up access to its online discount program to all carriers.
Convoy has an all-star list of investors, including Microsoft co-founder Bill Gates; Amazon founder Jeff Bezos; Expedia Chairman Barry Diller; Salesforce CEO Marc Benioff; Code.org founders Hadi and Ali Partovi; former Starbucks president Howard Behar; U2’s Bono and The Edge; among others. Generation Investment Management, a London-based fund co-founded by former vice president Al Gore, led the Series D round in September. Alphabet’s venture capital arm CapitalG is also a backer.