Digital freight startup Convoy confirmed Friday that it is cutting 7% of its workforce in an effort to slash operating costs amid concerns about a downturn in the economy and its potential impact on the company’s customers’ businesses.
Seattle-based Convoy, which is valued at $3.8 billion, raised $260 million in new funding in mid-April with $160 million coming from a series E preferred equity round led by current investors Baillie Gifford and T. Rowe Price and $100 million in venture- debt investment coming from Hercules Capital Inc.
“The market is not behaving normally,” a Convoy source familiar with the layoffs told FreightWaves.
The source said the layoffs were necessary amid growing concerns about the macroeconomic conditions, including high inflation and surging energy prices.
The layoffs were first reported by GeekWire and confirmed by FreightWaves.
FreightWaves CEO Craig Fuller said many companies are going to be slashing costs where they can as freight is slowing and rates are dropping.
“I think everyone’s just going into a risk-off environment because nobody knows how long and how deep a potential recession could be,” Fuller said. “Everyone’s just getting cautious.”
Since entering the freight market in 2017, Convoy works with a network of more than 400,000 trucking companies.
‘Decision was not easy, nor taken lightly,’ says Convoy
Convoy expanded its business significantly during COVID when the freight market was hot, but a source said the company had to right-size its employee count to account for the current challenges in the freight environment.
The freight-matching platform said it is also making other operating expense-related changes to ensure it is in “the strongest financial position ahead of the potential for worsening economic conditions.
“As a result of these changes, we were sad to have to say goodbye to approximately 7% of Convoy’s workforce today,” a Convoy spokesperson said in a statement. “This decision was not easy, nor taken lightly. With our recent fundraise behind us and the continued intrinsic strength of our business we look forward to continuing to improve the freight industry for the betterment of truck drivers, shippers, the economy, and our environment, whatever market conditions we encounter along the way. We will be opening up our networks to support departing staff in their efforts to secure new roles.”