Pandion, the start-up of Amazon Air founder, raises $ 30 million

At the end of 2014, Scott Ruffin was immersed in the trenches of Amazon’s logistics operation, when he was called upon to solve a major problem. The company relied on air freight partners to move its packages across the country, but needed more space to cope with its rapid growth.

Amazon has started to lease its own planes. And in 2016, Ruffin launched Amazon Air, a dedicated freight network that would compete directly with shipping giants UPS and FedEx.

Prior to Amazon Air, Ruffin played an early role in the development of Amazon’s sorting centers, facilities that allow the company to better control the path of a package to a buyer’s door and to speed up the process.

Now that he has seen the complicated nature of logistics for online retailers, Ruffin wants to help small businesses navigate the world of sorting, packaging and shipping. In February, its logistics start-up Pandion, located near Amazon’s Seattle headquarters, exited stealth mode with initial funding of $ 4.9 million.

Pandion said on Tuesday it had raised an additional $ 30 million from investors, including AME Cloud Ventures, a company led by Yahoo co-founder Jerry Yang, and Innovation Endeavors, co-founded by former Google CEO Eric Schmidt.

Bow Capital also joined the round. Rafi Syed, the general partner of the company, said Pandion is designed for the modern challenges of online retailing and to meet growing demand, which overloads the existing shipping system.

“Historical shippers weren’t designed for e-commerce, and buyers often feel the pressure of late deliveries, missing packages and a poor customer experience,” Syed said in a statement.

U.S. consumers are expected to spend $ 933.3 billion online this year, up 17.9% from 2020, according to eMarketer. Amazon is expected to account for 40%.

Pandion is tackling the remaining 60% and has already signed on a number of retailers, including several Fortune 100 companies, Ruffin said.

The company is building a network of warehouses for online retailers, with the opening of its first sorting center in the coming months. The new 150,000-square-foot site in Quakertown, Pa., Will help large retailers deliver reliable, low-cost two-day deliveries to the northeastern and mid-Atlantic regions of the United States, a region which, according to Ruffin, covers up to 45 million people.

“You’re talking about a pretty good chunk of the American population,” said Ruffin, who briefly headed Walmart’s e-commerce transportation division after leaving Amazon in 2017.

FedEx and UPS can only provide certain shipping capacity. They deliver to 40 million addresses, five days a week, while today’s ecommerce volume requires deliveries to 160 million addresses, seven days a week, Ruffin said.

Pandion aims to operate 20 sorting centers within three to four years. For comparison, Amazon has at least 69 such facilities in the United States, according to a September tally from MWPVL International, a supply chain and logistics consultancy. Target has tested a sorting center in Minnesota and plans to open five more by the end of the fiscal year.

Sorting centers are designed to reduce shipping times by organizing packages and grouping them by zip code, before loading them onto trucks for transport to a last mile delivery station, such as a postal service site. American. With this process, the shipping center does not have to sort the packages before delivering them to consumers.

In addition to investing in its own facilities, Pandion has developed software that allows it to detect potential problems in its shipping network and redirect packages to another facility. This makes its system more flexible than those operated by large shippers, who establish rigid paths that determine where packages go from the warehouse.

Ruffin said it was like a plane’s flight plan.

“Amazon, UPS, FedEx, they use this flight plan every time,” Ruffin said. “They even code it on the label so it’s kind of locked down.”

Pandion’s technology, which is still being tested internally, will allow it to alter the path of a package while it’s in flight, Ruffin said. For example, the software can report a warehouse that is closed due to a Covid-19 outbreak or a weather event. Pandion can then divert the packages to another location, increasing the likelihood that they will be delivered on time.

Ruffin said it was like “the Waze of e-commerce shipping.”

“We’re looking to see what happens to packages along a route, get that signal and make a decision in real time,” Ruffin said.

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