◼ TECHNOLOGY Bloomberg Businessweek February 8, 2021
19● AfterspendingyearsbuildingAmazon’sdeliveryoperations,ScottRuffinis creatingonetooffertoitscompetitors
A Shipping Guru Chases
The Middle Mile
LongbeforethepandemicoverloadedU.S.delivery
infrastructure, Scott Ruffin was trying to make
Amazon.com Inc. a shipping powerhouse. He spent
five years building out home-delivery operations
for the e-commerce giant, reducing its depen-
dence on services such as FedEx Corp. and United
Parcel Service Inc.
Now Ruffin wants to do it on his own. Introduced
in stealth mode in September with $5 million in
seed funding, his startup Pandion aims to help
major retailers offer affordable one- and two-day
deliveries and compete with his former employer.
The shipping business is hot right now, but
it’s also a mess. FedEx and UPS responded to
increased demand during the pandemic by raising
rates. Amazon—which has tens of thousands of its
own trucks and about 80 planes—fared better than
most, but still had to limit what shoppers could
buy. People were warned to start ordering their
Christmas gifts as early as October, and packages
piled up in warehouses during the holiday season.
A spokeswoman for FedEx said that shipping
volumes were up 24% during the peak season and
that the company would “continue to develop inno-
vative solutions to meet demand.” UPS declined to
comment for this story.
Ruffin’s startup is a bet that demand for deliv-
eries won’t subside as Covid-19 eases. U.S. shop-
pers are on track to spend $843 billion online this
year, up 6.1% from 2020, according to researcher
EMarketer, a signal that last year’s surge in
e-commerce spending wasn’t just a plague-year
fluke. “Amazon has solved the problem for itself,
but the rest of the world still needs a solution,”
says Harpinder Singh, a partner at Innovation
Endeavors, a Pandion investor.
Pandion aims to ease delivery cost and conges-
tion by focusing on the “middle mile” of a pack-
age’s journey, the leg between a package leaving
a warehouse and being placed in the vehicle that
drives it to a customer’s home. Amazon’s approach
to the problem involved building a huge network of
“sortation centers,” where packages are organized
by ZIP code and then passed off to the U.S. Postal
Service or the company’s own delivery network for
the trip to the final destination.
Because Amazon commands almost 40% of U.S.
e-commerce spending, Pandion will go after the
remaining 60%, which includes big retailers such
as Walmart, Target, and Wayfair. “It’s really tough
to compete with Amazon, and you can’t compete
without an alternative to FedEx and UPS,” says
Ruffin, a former Marine Corps logistics officer who
spent the past two years working in Walmart Inc.’s▲ Ruffin is betting
that high demand for
shipping will continue
after Covid