Convoy cancels all shipments, load board is empty, announcement upcoming

Jim L said:
Its a sign of the times. Venture Capitalists (VC) have a pile of money and are always looking for the next best thing to increase their pile of money instead of sitting in an interest-bearing investment. Now with interest rates going up the spread between an interest-bearing investment and a 'brick and mortar' investment is diminishing. The risk appetite is not there anymore.
To exasperate the issue most VC's have no clue in the business they are investing in. Their eyes pop based on balance sheets, earnings per share and PE sheets - that is all they know. All it takes is a good CEO salesman who can easily convince the VC that the company they run is a good investment but when the CEO leaves the VC is left holding the bag looking for a CEO to run the ship.
I have heard a number of VC's have purchased trucking companies in Ontario and I would bet that there soon will be an exodus of those VC's in the near future bankrupting those trucking companies.
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Big time.
 
Freight Broker said:
Convoy as I understand it focussed on the big shippers who offered at least a million a year in sales. It is very hard to grow volumes fast with little shippers who ship one or two loads per week. But those little shippers, in the end, are the ones who are easiest to work with and who are less susceptible to the rate cutters. My little shippers have always carried me through the hard times...so glad I have them.
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I actually believe at one point you had to guarantee Convoy a minimum spend, this is of course when they were the hot commodity in the industry.
 
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I personally went after big spend but didn't insist on $1M. I think their point was to amortize the cost of customer acquisition. Problem is that if you have to do it at 5% margin say, then pay the carriers faster than you're getting paid, pay for the back office which is largely IT people that aren't cheap, high cost of money now when operating on a rolling LOC ...

A lot of good legacy brokers have been bought up and made part of firms that are IT focused, raising money with valuations based on sales that are totally stupid. The firms that have good retained earnings and operating on little or no debt should be able to weather. Gotta wonder how companies like WWEX and Radiant are doing.
 
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From the CEO "we are in the middle of a massive freight recession and a contraction in the capital markets"

To translate: Lots of trucks, rates are down, shippers can make deals with the large national carriers who have capacity for now and venture capitals stopped throwing money at us so we could no longer pay shippers to give us their freight -- i.e. bid low, sell at a loss and subsidize the difference with the VC funding

They viewed themselves as a tech company and not a logistics company without an understanding of the freight market.

 
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Its Bezo's and Gate's way to stay on the top of the billionaire list. They start the investing and create the hype but I'm sure they got out long ago and let the rest take the fall.
 
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Would also cast doubt on the FMCSA who authorised those carriers and and the various jurisdictions who licensed their drivers. Authorized and licensed implies good to go.. if the carriers and drivers Convoy hired were unsafe then why were they green lighted as good to go by the government whose role is to ensure the public safety?
 
As the article states, the driver’s licence was under suspension, a fact that should have prevented him from being behind the wheel in the first place. In addition Prowheel, the carrier, was operating a vehicle “not compliant” for operation on a highway. Again, as the article states, a simple check of the Safer website, something we all do, or should do, would have revealed that Prowheel had numerous safety violations and driver infractions. I would tend to agree with the facts presented in the law suit, that Convoy was negligent and failed to exercise the necessary checks to ensure its contractors were compliant. Regulatory bodies such as FMCSA can put regulations in place, enforce them to a certain degree and occasionally prosecute offenders. The onus however, remains with the users/purchasers of transportation services to ensure that the people they hire are fully licensed and compliant with all current regulations.
 
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loaders said:
As the article states, the driver’s licence was under suspension, a fact that should have prevented him from being behind the wheel in the first place. In addition Prowheel, the carrier, was operating a vehicle “not compliant” for operation on a highway. Again, as the article states, a simple check of the Safer website, something we all do, or should do, would have revealed that Prowheel had numerous safety violations and driver infractions. I would tend to agree with the facts presented in the law suit, that Convoy was negligent and failed to exercise the necessary checks to ensure its contractors were compliant. Regulatory bodies such as FMCSA can put regulations in place, enforce them to a certain degree and occasionally prosecute offenders. The onus remains with the users/purchasers of transportation services to ensure that the people they hire are fully compliant.
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I agree - when vetting a new company I have always done a check of the FMCSA Safety record. If their OOS is close/above the national average I decline service, and politely tell the carrier they need to address that before coming to us for shipments again. On that note, a question to all of you. I will usually hire a company if their OOS rating is below the national average, how do you all feel about that? Do you follow that same train of thought? Or prefer it be under 15%, 10%...? Thoughts?
 
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