Amazon Air founder has a new start-up that aims to take on FedEx and UPS by speeding up shipping

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  • Scott Ruffin, who founded Amazon Air and helped grow its shipping operations, has a new start-up looking to help retailers expedite deliveries.
  • Pandian said Tuesday that it has raised $30 million and plans to open its first warehouse in time for the holiday shopping season.
  • “Suitable shippers were not built for e-commerce, and buyers often feel stressed through delayed deliveries, missing packages and poor customer experience,” said Rafi Syed of Bow Capital.

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In late 2014, Scott Ruffin was deep in the trenches of Amazon’s logistics operation when he was tapped to solve a major problem. The company relied on air cargo partners to move its packages across the country, but needed more space to meet its rapid growth.

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Amazon began leasing its own airplanes. And in 2016, Ruffin launched Amazon Air, a dedicated cargo network that will directly compete with shipping giants UPS and FedEx.

Prior to Amazon Air, Ruffin had an early role in developing Amazon’s sorting centers, features that allow the company to better control the journey of a package to a buyer’s doorstep and expedite the process.

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Now that he has seen the complex nature of logistics for online retailers, Ruffin wants to help smaller companies navigate the world of sorting, packing, and shipping. In February, their logistics start-up Pandian, located near Amazon’s Seattle headquarters, came out of stealth mode with a $4.9 million round seed funding.

Pandian said Tuesday that it raised another $30 million from investors, including AME Cloud Ventures, a firm led by Yahoo co-founder Jerry Yang, and Innovation Endeavor, co-founded by former Google CEO Eric Schmidt.

Bo Capital also joined the round. rafi syed, the firm’s general partner, said Pandion is designed to meet the modern challenges of online retail and the growing demand, which is overloading existing shipping systems.

“Current shippers were not built for e-commerce, and buyers often feel stressed due to delayed deliveries, missing packages and poor customer experience,” Syed said in a statement.

US consumers are projected to spend $933.3 billion online this year, up 17.9% from 2020 e-marketer. Amazon is expected to account for 40% of that.

Pandian is going after the other 60%, and has already signed on to a number of retailers, including several Fortune 100 companies, Ruffin said.

The company is building a network of warehouses for online retailers, with the first sorting center to open in the coming months. The new 150,000-square-foot site in Quakertown, Pennsylvania, will help major retailers offer low-cost, reliable two-day delivery in the Northeast and Mid-Atlantic regions of the U.S., an area Ruffin said to 45 million people. does cover.

“You’re talking about a very good segment 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 offer so much shipping capacity. They deliver to 40 million addresses five days a week, while current e-commerce volume requires deliveries to 160 million addresses, Ruffin said.

Pandian aims to operate 20 sorting centers in the next three to four years. By comparison, Amazon has at least 69 such facilities in the US, according to September data. MWPVL International, a supply chain and logistics consulting firm. Target is testing one sortation center in Minnesota and plans to open five more by the end of the fiscal year.

Sortation centers are designed to cut shipping time, by organizing packages and bundling them by zip code, before loading them onto trucks for transportation to a last-mile delivery station, like a U.S. Postal Service site. Through that process, the shipping center is not required to sort packages before delivering them to consumers.

‘Way of e-commerce shipping’

In addition to investing in its own facilities, Pandian has developed software to spot potential hiccups in its shipping network and resend packages to another facility. This makes its system more flexible than that operated by larger shippers, who set rigid routes that determine where packages go from warehouse.

Ruffin said it’s like an airplane flight plan.

“Amazon, UPS, FedEx, they fly that flight plan every time,” Ruffin said. “They even code it on the label and so it’s kind of off.”

Pandion’s technology, which is still being tested internally, will allow it to change the path of the package during flight, Ruffin said. For example, software can flag a warehouse that has closed due to an outbreak of COVID-19 or a weather event. Pandion can then divert the packages to another site, which increases the chances that they will be delivered on time.

Ruffin said it’s akin to “the way of e-commerce shipping.”

“We’re looking at what’s happening with packages along the route and getting that signal and making real-time decisions,” Ruffin said.

Watch: Inside the rapid evolution of Amazon Logistics and how it’s taking on third-party shipping

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