LiveOn: The Survival of the Convoy Movement
Flexport, the digital freight forwarder, has sold its Convoy technology platform to DAT Freight & Analytics in a move that signifies a shift in strategic priorities within the logistics sector. The sale, which reportedly generated a significant return on investment for Flexport, represents a transformation for both companies and the broader freight industry.
From the outset, Flexport has remained DAT's largest customer on the platform. The sale, however, does not affect this relationship. Instead, it allows Flexport to focus on its core strength: international trade and freight forwarding, rather than expanding into domestic door-to-door logistics.
For DAT, the acquisition of the Convoy Platform marks a significant step forward. DAT's traditional load board operates much like Craigslist, where loads and capacity are matched, but deals are finalized offline. By integrating Convoy's technology, which automates nearly every aspect of freight transactions and connects brokers with trusted carriers, DAT significantly enhances its digital freight-matching capabilities.
The Convoy platform, now owned by DAT, will join DAT's recent acquisitions, including Trucker Tools and Outgo. DAT is offering the Convoy platform with zero upfront cost; users pay only transactional fees, which may lower barriers to adoption and potentially prompt demand to outpace onboarding capacity.
Flexport's CEO, Ryan Petersen, stated that a neutral platform is not neutral due to Flexport's brokerage and freight forwarding activities. The sale of the Convoy technology platform, therefore, allows Flexport to maintain a neutral digital execution layer.
The Convoy technology platform was originally acquired by Flexport for roughly $16 million. Over the subsequent 18 months, the platform was rebuilt and onboarded tens of thousands of carriers. During its rebuilding phase, it was also reengaged with brokers. The sale of the Convoy technology platform for approximately $250 million marks a dramatic return on investment for Flexport, as it was originally acquired for roughly $16 million.
The sale of the Convoy technology platform expands DAT's offerings beyond its load board. This move enables better load management, incremental business capture, and ultimately, increased choice for users. DAT's acquisition of the Convoy platform is a strategic move that aligns with the shifting priorities within the logistics sector.
In summary, Flexport's strategic reason for selling the Convoy technology platform to DAT Freight & Analytics centers on focusing on its core strength, while DAT's expansion benefit includes moving beyond a basic load board to an automated, digital freight-matching platform. This deal marks a win for Flexport (capitalizing on the asset), DAT (enhancing technology and offerings), and the broader freight industry by pushing forward digital freight-matching innovation and efficiency.
References:
- DAT Newsroom
- FreightWaves
- Supply Chain Dive
- FreightTech
- The sale of the Convoy technology platform allows Flexport to prioritize its focus on international trade and freight forwarding, allowing them to maintain a neutral digital execution layer.
- With the acquisition of the Convoy Platform, DAT Freight & Analytics strengthens its digital freight-matching capabilities, moving beyond a basic load board towards an automated platform that connects brokers with trusted carriers.
