Pandion, a parcel logistics network that sought to solve the “middle mile” of e-commerce residential delivery, shuttered operations abruptly last Friday.
Founder and CEO Scott Ruffin, who was also the founder and former head of Amazon Air, told employees in a memo that the company would have to be shuttered immediately, due to an inability to secure more funding, or potentially get acquired by another business.
“As many of you know, the leadership team and I have been speaking with many investors and several potential acquirers. We have spent the last month in daily discussions with these parties, including through the holidays. We have been very close to a deal several times,” said Ruffin in the memo. “However, it has become clear to me and the board that those conversations have run their course without a favorable outcome. Due to our legal obligations to our lenders, our board of directors and I have decided that we must immediately shut down the company.”
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According to Geekwire, Pandion employed 63 people, all of whom have been laid off. The employees will be paid through Jan. 15 without severance, “because we owe more than we have in the bank.”
Ruffin said the company had already cancelled inbound packages and would have no further pickups. For the minimal packages remaining at the company’s facilities, Pandion had one last dispatch to the U.S. Postal Service (USPS).
As a result of the closure, Pandion’s headquarters in Bellevue, Wash. will shutter, along with five sortation centers in Philadelphia, Dallas, Los Angeles, Chicago and Atlanta.
Last March, Pandion secured $41.5 million in Series B funding to grow the company’s delivery network and build new technology offerings. At the time, Bloomberg reported that company sales were on track to reach $220 million in 2024.
But that round only helped the firm get through the 2024 fourth quarter, according to Ruffin’s memo.
Pandion raised about $125 million in equity over the last five years.
The company sought to oversee the middle mile of the parcel shipping journey for brands by picking packages up at their fulfillment centers, before bringing them to its own network of five sortation centers. After Pandion sorted the products, the company would deliver them through a network of more than 1 million last-mile drivers.
These drivers were employed by staffing agencies, and not Pandion.
On its website, the firm touts that it could reach 100 percent of U.S. homes without dealing with residential or peak surcharges typically levied by parcel delivery firms like UPS, FedEx and USPS.
Machine learning algorithms identified the optimal last-mile carrier and route based on factors including speed, reliability and on-time delivery, according to the company. Pandion said it offered ground delivery speeds ranging between one and five days.
Pandion’s closure follows the dissolution of similar parcel delivery platforms such as Point Pickup and Maergo in 2024, as well as the divestment and liquidation of Pitney Bowes’ Global Ecommerce (GEC) unit.
A wider freight recession that has been ongoing since mid-2022 has not been kind to tech players in the logistics space. This is largely because of the thin margins that comprise e-commerce and fulfillment operations, tougher competition on pricing, as well as a lack of venture capital funding to help these companies scale when they are still burning through cash.
While that funding was prevalent throughout 2020 and 2021, when Pandion was founded and taken out of stealth mode, the tides changed in early 2022 when the Federal Reserve began hiking interest rates—thus increasing borrowing costs for businesses and making funding rounds riskier for banks.
In his memo, Ruffin alluded to the difficulties experienced within the sector, directly calling out the slowdown in funding.
“In our case, we entered the market at a challenging time, and we needed more runway to scale, but the shift in funding availability and the U.S. small parcel market has limited our chance to continue to grow,” said Ruffin.
Even major parcel players like UPS, FedEx, USPS and DHL have struggled to grow volumes in recent years due to an imbalance of delivery capacity and demand that has existed since the peak e-commerce acceleration during the Covid-19 pandemic.
Digital trucking brokerage Convoy experienced a similar scenario to Pandion on a wider scale. The company ceased operations in October 2023 despite raising $260 million 18 months prior, which had brought the company to a $3.8 billion valuation.
Convoy’s technology, and some of the employees at the original company, lived on after the tech stack was acquired by digital freight forwarder Flexport later that month.
While Pandion was unable to complete a sale of the company ahead of the shutdown, the startup’s technology could possibly be put up for sale for a potential acquirer.
