📊 What caused the rapid downfall of Convoy?

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What happened to push Convoy under Convoy, a digital freight brokerage startup, experienced a rapid downfall just 18 months after achieving a valuation of $3.8 billion. The company focused on automating the load-matching process to reduce costs and speed up operations. Convoy's business model aimed to disrupt the low-margin freight brokerage industry. So what happened?

• Despite early success and high-profile partnerships, Convoy struggled to generate sufficient revenue, and was recently losing $10M per month.

• Convoy’s business was designed to operate similarly to commodity trading, but using algorithms to buy and sell freight loads and trucking capacity.

• The company's focus on high-volume, low-margin freight made it ill-equipped to handle the sharp decline in demand that affected shipping markets.

• Convoy “didn’t get big enough, fast enough” leading to the growing losses that doomed the company.

• The company sought new investors and potential buyers, including United Parcel Service (UPS) and C.H. Robinson Worldwide, but was unable to secure a deal.

• With limited funds remaining, venture firm Hercules Capital stepped in to recoup some of the money it was owed, overseeing the sale of Convoy's assets, including its technology. (link)

• Flexport acquired Convoy’s tech stack for an undisclosed sum and plans to restore the company’s shuttered full truckload offering in the coming weeks.

Jack Cooper Making $2B Bid for Bankrupt Yellow Jack Cooper Transport is making a bid of nearly $2B to acquire the assets of bankrupt trucking firm Yellow, in a move that could save many of the 30,000 jobs lost when Yellow shut down. The proposed purchase is gaining support on Capitol Hill, including lobbying from the Teamsters union. Jack Cooper is a 95-year-old auto transport and logistics company and is owned by the Riggs family. They are seeking support from the Biden administration for the deal, which is contingent on the handling of debt inherited from Yellow. The purchase could repay the government loan received by Yellow and preserve union jobs. (link)

ONE acquires significant share in major container ports Ocean Network Express (ONE) has acquired a significant stake in major container ports, including TraPac LLC, Yusen Terminals LLC, and Rotterdam World Gateway (RWG). TraPac and YTI are container terminal operators in Los Angeles and Oakland, California, with a combined capacity of 4.3M TEU annually. RWG operates a container terminal in the Port of Rotterdam with an annual capacity of 2.6M TEU. These acquisitions strengthen ONE's presence in strategic locations: the US West Coast, North Europe, and South East Asia. ONE aims to utilize these terminals to improve service quality and manage supply chain disruptions for its customers. (link)

Chinese electric truck maker Windrose will seek US IPO in 2024 Chinese electric truck manufacturer Windrose Technology is preparing for an initial public offering (IPO) in the US, aiming to raise at least $200M. The funds will be used for research, development, and production of Windrose's zero-emission trucks equipped with autonomous driving technology. The company has already secured $100M in a pre-IPO round, with backing from investors including FountainVest Partners, Yunqi Partners, and GSR Ventures. Windrose plans to start delivering its trucks to customers in 2024, with 1,000 orders in the US and 500 in China already secured. The company is also developing a hydrogen fuel cell truck. (link)

Scan Global Logistics expands into South Korea with latest acquisition Scan Global Logistics (SGL) has expanded into the South Korean market by acquiring ENK Logistics. ENK Logistics, established in 2006, offers freight and warehouse solutions to a range of industries. This acquisition marks a milestone in SGL's growth in the Pacific region, following previous acquisitions in Australia and New Zealand. South Korea's position in the trade markets of Southeast Asia and beyond makes it a strategic addition for SGL, which aims to establish a presence in major economies worldwide. The acquisition allows SGL to offer its customers an extensive global network and expanded service offerings. (link)

DP World wins 30-year concession to run Dar Es Salaam Port DP World, a global logistics operator, has signed a 30-year concession agreement with Tanzania Ports Authority (TPA) to run and modernize the Dar es Salaam Port. The company plans to invest over $250M initially, with the potential to increase to $1B over the course of the concession. The investment aims to enhance the port's cargo handling capacity, improve cargo clearing systems, and reduce delays. Future investments may include temperature-controlled storage and improved rail freight links. The project is expected to boost trade opportunities, drive economic growth, and create job opportunities, while also reducing logistics costs for Tanzania. (link)

Kryalos SGR and Crossbay purchased logistics property near Milan Kryalos SGR and Crossbay have made their first acquisition through the Bay Fund, a last-mile logistics fund, purchasing a 9,000 sq.m property near Milan, Italy. The asset, acquired from an international food company, includes a vacant warehouse with 18 loading bays. The property is located in Pieve Emanuele, less than 15km from Milan, with excellent accessibility to major motorways. Kryalos SGR and Crossbay plan to undertake extensive renovation and energy efficiency improvements, aiming to enhance the building's features and ESG credentials. The refurbishment is expected to be completed by Q2 2024. (link)

Use unspent funds on truck parking, governors are asked The American Trucking Associations (ATA) and other industry stakeholders are urging state governors to utilize unspent pandemic stimulus funds or additional funding from President Biden's infrastructure law to expand truck parking. A severe truck parking shortage has become a safety concern for drivers. Lack of parking ranked the second-most significant issue on the American Transportation Research Institute's annual industry survey. The National Tank Truck Carriers and the Truckload Carriers Association have also signed letters highlighting the urgency of this issue. Legislation offering grants for new truck parking spaces is currently pending in the House. (link)

Apple, Amazon, Nike, and others back new push to decarbonize supply chains The Clean Energy Procurement Academy, supported by Apple, Amazon, Nike, Meta, PepsiCo, and REI Co-Op, aims to lower greenhouse gas emissions in supply chains by promoting the use of clean energy. The initiative seeks to equip companies with the technical readiness to explore and adopt clean energy, offering educational programs and establishing renewable energy "buying communities" in key manufacturing regions. The initiative addresses the scope 3 emissions challenge faced by industries like tech, retail, and CPG, where a significant portion of emissions are generated in the supply chain. Collaboration, data sharing, and support between buyers and suppliers are crucial for decarbonization efforts. (link)

Global EV battery supply chain puzzles over China graphite curbs China dominates the production of graphite, a vital component of electric vehicle batteries. The new export rules, effective from December 1, will require permits for high-end synthetic graphite and key forms of natural graphite. This move is expected to disproportionately impact foreign manufacturers who have not yet transitioned to using synthetic materials like their Chinese counterparts. Japan, South Korea, and the United States, major buyers of Chinese graphite, could face a slowdown or reduction in graphite supplies for EV battery production. (link)

Maersk: oversupply set to extend shipping downturn In its third-quarter results, Danish container line operator AP Møller Maersk reported significant declines in profit and revenue compared to the previous year. The global shipping industry is facing challenges such as falling freight rates, weak consumer demand, and an excess supply of ships. The pandemic led to a boom in demand and record orders for new ships, but now the oversupply is expected to reach up to 25%, pushing freight rates even lower in the coming year. To combat these challenges, Maersk plans to cut costs by reducing its workforce by 10,000 and scaling back capital spending. Analysts anticipate the company will face a net loss in the next year. (link)

Caterpillar shares fall as shrinking backlog raises demand worry Caterpillar Inc., a global leader in construction and mining equipment, saw its shares decline as the company reported a shrinking order backlog in the third quarter. This drop of $1.9B, the first since Q3 2020, raises concerns about slowing demand for the company's machinery. Despite beating analyst estimates with higher prices and strong sales, Caterpillar's declining backlog indicates potential economic headwinds. Dealer inventories continued to grow while orders declined 15% YoY, pointing to a slowdown in sales and earnings growth for Q4. The company's performance in the mining, energy, and transportation sectors was weaker than expected, although its construction equipment business showed better-than-expected revenue. Caterpillar remains cautious about restructuring expenses and expects $700M for the full year. (link)

Tech

Körber Supply Chain presents its AI-powered robotic picking solution Körber Supply Chain's parcel logistics arm showcased its advanced AI-powered robotic picking solution at Parcel+Post Expo. The updated VarioPick solution boasts efficient sorting capabilities for non-conveyables, format and volume splits, and automatic loading. With a throughput of up to 3,600 parcels per hour, the VarioPick robot can singulate parcels from a moving bulk stream using AI-based recognition, advanced control systems, and gripper technology. It precisely identifies object attributes, such as shape and size, to determine the optimal gripping point. This highly adaptable system can be easily trained to meet varying customer needs and seamlessly integrated into existing operations. (link)

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