Convoy Raises $400 Million to Expand Digital Freight Business
13 Noviembre 2019 - 5:29AM
Noticias Dow Jones
By Jennifer Smith
Digital freight broker Convoy raised $400 million in a Series D
funding round that values the business at $2.75 billion and backs
its expansion in a growing array of technology-focused upstarts
making inroads in the freight transportation sector.
Sustainable investment management firm Generation Investment
Management LLP and previous investor T. Rowe Price Associates Inc.
led the latest funding round, with participation from previous
investor Alphabet Inc.'s CapitalG fund and others.
Founded in 2015, Seattle-based Convoy is among the biggest
operators of online marketplaces that match truckers with shippers
needing to move cargo. The startups, including Uber Technologies
Inc.'s Freight unit, aim to make booking shipments more efficient
by using mobile apps to find available trucks and automating
transactions that had traditionally been arranged through emails
and phone calls,
Generation Investment Management said it was drawn to the
business in part because connecting carriers and shippers more
easily can reduce empty miles for trucks, potentially mitigating
carbon emissions.
U.S.-based digital freight matching startups drew more than $661
million in investor funding between 2011 and 2018, according to
Armstrong & Associates. Evan Armstrong, president of the
research firm, said the total backing since 2011 should surpass $1
billion this year with infusions for Convoy and other
operators.
The newer entrants are trying to build scale in a fragmented
freight brokerage sector where even the biggest players command a
small portion of the overall market.
Armstrong & Associates estimates the domestic transportation
management market, which includes brokerage and other logistics
services, generated $86.5 billion in revenue last year. C.H.
Robinson Worldwide Inc., the largest freight broker in North
America, generated $16.6 billion in gross revenue in 2018 from
truck brokerage and other services, while competitor Echo Global
Logistics Inc. reported $2.44 billion in overall 2018 revenue.
Analysts say competition from startups, including aggressive
pricing, is pushing traditional transportation companies to invest
billions in technology as they build their own digital
offerings.
Convoy's latest funding brings its total capital raised to more
than $668 million. A previous funding round of $185 million in
September 2018 valued the company at more than $1 billion and
Convoy said the new round more than doubled the valuation to $2.75
billion.
The company, whose customers include Anheuser-Busch InBev SA and
Procter & Gamble Co., plans to use the money to hire more
product engineers and other staff as the company looks to more than
double its head count, now more than 800, over the next couple of
years, Chief Executive Dan Lewis said in an interview.
The company will also expand programs such as a trailer-sharing
service that allows carriers to pick up prefilled trailers and drop
them at facilities without having to wait for goods to be unloaded.
It also plans to extend the integration of Convoy features, such as
real-time pricing data, into the software systems that shippers use
to manage transportation.
Mr. Lewis said Convoy had a "clear path to profitability" with
"better than industry economics in many of our top lanes" but
declined to provide a timeline for when the business will turn a
profit.
He declined to provide revenue figures but said the company is
moving more than twice as many loads a week as it did a year ago,
with revenue gains roughly in line with its shipment growth.
Convoy is looking at markets outside the U.S. and plans to
invest more in that area in the future, Mr. Lewis said.
The company is also open to potential acquisitions in the U.S.,
such as buying a traditional brokerage, although Mr. Lewis said
there were no specific merger plans. "We're not in talks or looking
to be acquired," he said.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
November 13, 2019 06:14 ET (11:14 GMT)
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