Convoy, a freight company backed by Bezos, shuts down after laying off hundreds of employees. Read the CEO's memo to staff.

• Digital freight broker Convoy announced Thursday that it’s shutting down operations.
• Just 18 months ago, Convoy raised $260 million at a $3.8 billion valuation.
• Flexport announced layoffs for about 20% of its workforce, one week after a supply chain software startup made a similar announcement.

Convoy, a digital freight broker, announced on Thursday that it is shutting down its operations due to a "massive freight recession." This decision was made just one week after supply chain software startup Flexport announced it would lay off approximately 20% of its own workforce.

The Seattle-based Convoy was established to revolutionize the fragmented and outdated freight brokerage industry, where truckers and customers communicated through phone and fax. Prior to this week, the company had approximately 500 employees.

This year, Convoy ranked No. 47 on the CNBC Disruptor 50 list, which is a five-time recognition.

During the Covid-19 pandemic, supply chain issues and demand spikes led to soaring prices in the logistics space. However, as trucking rates have come back down, this has removed the tailwind for Convoy's on-demand technology. The company, like other startups in and beyond the freight sector, has conducted multiple rounds of layoffs and closed an Atlanta office.

Despite the challenging 2022 for the sector, Convoy secured a $260 million round of new capital from investors, led by U.K.-based Baillie Gifford and Hercules Capital, while JPMorgan extended a $150 million line of credit to Convoy, valuing it at $3.8 billion just 18 months ago.

Dan Lewis, co-founder and CEO of Convoy, who previously led new shopping experiences at Amazon and Microsoft, announced in a memo to employees on Thursday morning that the company is facing both an unprecedented freight market collapse and dramatic monetary tightening.

The perfect storm, which was a combination of events, destroyed our progress and our logical strategic acquirer at the same time.

Here’s the full memo: