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Yahoo
3 days ago
- Business
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Less than 2 years after Flexport bought Convoy's tech stack, it's being sold to DAT
The tech stack that was at the heart of now-defunct digital brokerage Convoy is on the move again, being sold to DAT in a move seen as significantly broadening that company's value proposition in the freight market. Freight forwarder Flexport, which acquired the tech stack from the remnants of Convoy less than two years ago, said Monday it is selling the product to DAT. When a company retreats from something it bought quickly, it is often a sign of defeat. (An old reference certainly, but the deal by Quaker Oats (NYSE: PEP) in the 90's to buy beverage maker Snapple for $1.4 billion, only to sell it back to its original owners three years later for $300 million, is considered the ultimate example of that sort of humbling failure). There is no sign that is the case with the quick flip of the Convoy tech stack. Ryan Petersen, the CEO of Flexport, said the return on the sale of the Convoy tech 'puts Flexport in an awesome place financially.' When Flexport purchased the Convoy tech stack in late 2023, the price on the transaction was reportedly $16 million, though neither company confirmed that price. The sale to DAT reportedly was made at a price near $250 million, though the companies declined to disclose the sales price. Besides the strong return on investment, Petersen, in a joint interview with DAT's CEO Jeff Clementz, said the presence of a powerful technology tool serving brokers that is supposed to be neutral could often complicate Flexport's primary business of freight forwarding. Neutral might not be neutral 'What we realized is that a neutral platform is not neutral,' Petersen said. 'We have a brokerage. We're a massive freight forwarding company.' The combination, he said, raised questions in the industry whether the Convoy platform truly could be seen as neutral. It's not the first time a company in the freight tech world has wrestled with the issue. When what is now Triumph Financial (NASDAQ: TFIN) bought HubTran to serve as an open loop auditing system for brokers and factoring companies, Triumph's management took great pains, repeatedly, to stress that its traditional factoring business could not get an inside look at what its factoring competitors who were using the legacy HubTran platform were doing. Petersen noted that the digital brokerage business that came with its 2023 acquisition of the Convoy tech stack will remain with Flexport. It processes about 100,000 loads per year, he said, 98% of which are completed with no human involvement. It will also continue to use the Convoy system even though it will now be owned by DAT, according to Petersen. 'On day one, we will be their biggest customer and we hope to continue to be their biggest customer,' he said. A widening range of offerings from DAT For DAT, the purchase is possibly transformative. In the past several months, besides promoting Clementz to CEO, it has purchased visibility provider Trucker Tools and payments platform Outgo. (Clementz said DAT did not pursue an acquisition of the Convoy tech stack when it was first offered for sale as part of the Convoy bankruptcy). With the purchase of the Convoy tech stack, it has now vastly increased its range of offerings to the freight sector with capabilities that have moved well beyond its traditional load board. Clementz, in his interview with FreightWaves, laid out what might be considered the three segments of how loads are offered into the market. About 50% of broker loads, he said, get moved through a broker's private network. But after that, he said, 'you might go to other load boards,' adding that DAT is the 'backstop you need to go to, ultimately, especially in the last 24 to 48 hours.' If brokers choose to use their private network, Clementz said, that also may come with a decision to put the load on what will now be DAT's Convoy platform, 'because I don't have to touch it. And if it all works, fantastic. If not, then I'll intervene and I'll work it through the load board.' Ultimately, he said, DAT believes the Convoy platform, with its power of automation to get shipper and carrier together, will be the first place that loads will be placed. But from there, Clementz said, if a match isn't made it can 'waterfall' down to the DAT platform. 'We think we can go directly from the shipper to the TMS (transportation management system) and into the Convoy platform directly and then move to the load board,' Clementz said. The Convoy tech team–which is coming over to DAT in the deal–already has been working with TMS providers to have loads in a TMS populate into the Convoy platform automatically. Load board will continue to be dominant for awhile But change isn't overnight. 'We actually think the load board will be the primary use case for quite a long time,' Clementz said. Fraud prevention is expected to be a major selling point of the broader DAT product offering, Clementz said. DAT already was set to launch a fraud management solution before the deal with Flexport. But the Convoy system long had been admired for its own fraud prevention tools, Clementz said. Building it into the DAT platform on top of its own capabilities 'will really make DAT the safest platform,' he added. There will be no upfront fees for DAT users to sign up to use the Convoy platform, Clementz said. Fees will be transactional, so a DAT user can access the Convoy system with no payments unless a transaction is completed. But that fact also is a driver to the deal, according to Clementz. Bringing in new users on to the system has an extremely low customer acquisition cost, which often goes by the acronym CAC, and that may slow some early adoption, he added. 'I think we will have more demand than we can handle for onboarding, so we'll probably have to create a wait list because there's no cost to sign up for this,' Clementz said. 'It will take time for us to integrate accounts, set them up and get them going.' DAT is a unit of publicly-traded Roper Technologies. (NASDAQ: ROP) In the company's latest conference call with analysts, president and CEO Laurence Hunn said DAT's financial performance in the second quarter 'was solid…and had strong (average revenue per unit improvements).' DAT data is not broken out separately in the Roper earnings. Hunn also said DAT had made 'significant progress' integrating Trucker Tools into its system. More articles by John Kingston Yet another broker liability case, this time in the Fifth Circuit, adds to the growing mix Ryder's used vehicle numbers show a bullish corner: tractor sales Five takeaways from the State of Freight for July: What earnings and the indices are saying about the market The post Less than 2 years after Flexport bought Convoy's tech stack, it's being sold to DAT appeared first on FreightWaves.
Yahoo
6 days ago
- Business
- Yahoo
Weak demand, oversupply dent Marten Transport's Q2 earnings
This story was originally published on Trucking Dive. To receive daily news and insights, subscribe to our free daily Trucking Dive newsletter. Marten Transport's earnings continue to be pressured by the ongoing freight market recession's oversupply and weak demand, Executive Chairman Randolph Marten said in an earnings press release last week. The carrier's Q2 operating income went down 2.4% at $9.7 million compared to approximately $10 million a year ago; its operating ratio essentially remained flat at 95.2%, compared to 95.3% YoY, the carrier reported in an earnings presentation last week. The trucking industry has been grappling with an early peak season, lower demand and oversupply. On top of these challenges, the ongoing tariff frenzy also continues to create uncertainty for carriers. Still, the carrier remains expects future improvement from current market conditions. Marten is focused on 'minimizing the freight market's impact — and the impact of the U.S. and global economies with the current trade policy volatility while investing in and positioning our operations to capitalize on profitable organic growth opportunities.' The chairman also said such growth opportunities are expected to be positively impacted by anticipated additional industry capacity exits relating to increased enforcement of the English Language Proficiency and B-1 visa regulations. State and federal officials were set to enforce out-of-service violations starting on June 25 for failure to comply with English-language proficiency, following several rule changes made in May. Recommended Reading Marten Transport reinstates executives' salaries Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-07-2025
- Business
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XPO rating cut by S&P, agency cites continuing weak freight market
XPO's credit rating has been downgraded by S&P Global Ratings, as the ratings agency said 'persistently soft freight market conditions' are not likely to improve on a 'material' basis for the next 12 months. The LTL carrier's new issuer credit rating is BB, down one notch from BB+. XPO (NYSE: XPO) has had a negative outlook from S&P Global since December 2023. A negative outlook is often a prelude to a downgrade–just as a positive outlook can come before an upgrade–but the more than 18 months it has sat with a negative outlook and no action is relatively long by credit agency standards. In conjunction with the downgrade, S&P Global moved the outlook on XPO to stable from negative. With the move, the company rating on XPO at S&P Global (NYSE: SPGI) and Moody's (NYSE: MCO) are now equivalent. Moody's has a Ba2 rating on XPO, which is considered on the same level as a BB rating at S&P Global. Both grades are two notches below the cutoff for investment grade versus non-investment grade debt ratings. S&P's move comes more than two weeks after Fitch Ratings affirmed its rating on XPO at BB+. That is one notch above the ratings for Moody's and S&P Global, but also is not investment grade. When XPO was put on a negative outlook by S&P at the end of 2023, a key spur to that action was XPO's acquisition of 28 terminals from bankrupt Yellow Corp. for $870 million. That acquisition resulted in 'elevated leverage projected over the near term,' S&P said in its rationale for why it made the change on XPO Thursday. 'At the time, we believed the freight market was nearing an inflection after operating at trough levels since mid-2023; however, market conditions have yet to show meaningful improvement, and we no longer anticipate conditions will improve over the next 12 months.' A recap of the conditions facing trucking and the LTL sector is familiar to those in the industry: 'tonnage has continued to decline…through both decreasing shipment per day and weight per shipment, a meaningful departure from our previous expectation for tonnage growth inflecting positive back in 2024.' In discussing the terminals that led to the negative outlook, S&P said the doors the company bought 'left XPO with excess capacity of 30% as volumes remain muted.' The bearish outlook for the freight market pops up numerous times in the S&P Global ratings report. Tonnage 'could return to growth in 2026,' the agency said, but it would not be at a pace that would have led XPO to keep its BB+ rating. 'Ongoing uncertainty around trade policies and potential effects on economic growth further clouds visibility into macroeconomic conditions that could weigh on demand,' S&P Global said. Among the financial metrics cited by S&P Global that led to the downgrade, beyond its macroeconomic view of the freight market, the ratings agency said XPO's ratio of Funds From Operations (FFO) to debt will be in the high 20% level by the end of 2025 and reach above 30% by the end of 2027. That ratio was about 23% when it did the Yellow deal, S&P said. The 27% level 'remains below our 30% downside trigger.' XPO's net debt leverage at the end of the first quarter was 2.5X, which S&P Global said was an improvement from a year earlier, when it was 2.9X. The target for the company is 1X to 2X, the agency said. 'Leverage has consistently been above management's target,' S&P Global said. Parts of the S&P report are an endorsement of the company's position relative to its peers. It said the LTL carrier 'continues to outperform the industry with quarterly yield growth consistently in the mid- to high-single-digit percent area of the past years.' XPO's stock is up 23.4% in the last year and 14.9% in the last month. By comparison, Old Dominion Freight Lines (NASDAQ: ODFL) is up 4.9% in the last month and down 6% in the last year. S&P Global's praise of XPO It cites new revenue from 'value-added services,' and increasing the level of insourcing of linehaul miles. As a result, its level of purchased transportation is 'now approaching a steady state,' S&P Global said. In the first quarter of 2025, XPO's purchased transportation of $399 million was down 8.9% from the $438 million a year earlier as the company's revenue was down just 3.2%. Even with a significant percentage of the Yellow terminals now seen as surplus capacity, S&P Global did not criticize the acquisition. Even as tonnage remains weak, the agency said, 'we expect the acquired terminals to provide some cost benefit in terms of linehaul, pickup and delivery, and dock operations. Over the longer term, we continue to believe they will be incrementally margin accretive when the market inevitably recovers.' More articles by John Kingston State of Freight Takeaways: English language rule for truckers takes effect, early impacts emerging First legal steps taken, this time by WSTA, to untangle the legal knot of the Clean Truck Partnership Two positive votes on logistics at Moody's: GXO and C.H. Robinson The post XPO rating cut by S&P, agency cites continuing weak freight market appeared first on FreightWaves.
