Transportation and warehousing are multitrillion-dollar industries, but the technology that powers them is often outdated, inefficient, and siled. Pallet, which today announced an $18 million Series A funding round led by Bain Capital Ventures, is building an all-in-one transportation and warehouse management system using AI to help companies from order entry to driver dispatch and management. We have made it possible to streamline our operations. Inventory and accounting.
Sushanth Raman, CEO and co-founder of Pallet, was an early engineer at low-code startup Retool before leaving to start his own company with co-founder and fellow Retool engineer Andrew Spencer. In fact, both of them have family members involved in the logistics industry. Raman's grandfather worked in the shipping industry, and Spencer's father runs the engineering team at transportation management company Mercurygate.
Image credit: Palette
But that wasn't actually what got Raman into the field, he said (though it certainly helped). Instead, they met with various logistics companies around the Bay Area and discovered that much of the work was still done manually. In some cases, half of a logistics company's employees may be responsible for back-office operations or customer support.
“Logistics is a huge industry. Trillions of dollars, more than $30 billion, are spent on these software systems, known as transportation and warehousing systems,” Raman explained. That's a huge addressable market.
Meanwhile, the industry is rapidly digitizing, especially with the adoption of carrier scorecards, even though much work is still done manually. A carrier scorecard is essentially a way to evaluate a carrier's performance across a number of KPIs, such as response time, punctuality, etc. “All of a sudden, your technology becomes a big driver of your bottom line, because if you're not responsive enough, you're not doing enough business with shippers,” Raman said. This means that unlike other industries that still often rely on Excel spreadsheets and manual data entry, the world of logistics has a real incentive to increase efficiency with the help of new technology. Masu.
Image credit: Palette
“Pallet is really like a modern operating system for moving any physical product from point A to point B,” Raman says. And like any modern OS (looking at you, Microsoft), AI is involved. The core idea here is to use AI to eliminate the need for users to manually enter orders or respond to quote requests. Raman explained that in an ideal world, pallets would enable what is called “contactless ordering.” “Once an order is initiated and sent to you, it can be delivered without any human involvement. I think the whole industry is moving towards that,” he said.
Specifically, this means Pallet plans to offer an AI agent that can automate many, and perhaps all, of the steps traditionally required to make the logistics industry flow.
In the 18 months since its launch, Pallet has gone from zero to $3 million in annual occupancy and has about 60 customers, he said. At these companies, 90% of employees have an account and 70% use the tool every day. One reason for this is that Pallet covers the entire process, from the time a package is received by a logistics provider until payment is made.
Currently, Pallet primarily works with companies that carry out short- and long-distance transportation and deliver large items such as furniture and home appliances. In the long term, we want to move beyond that and also handle e-commerce shipping. Already, Pallet says some teams using the service have seen a 70% reduction in workflows such as order entry.
The company is currently primarily focused on trucking, but plans to expand beyond that over time.
Kevin Zhang of Bain Capital Ventures said his company, and Bain Capital, have long been interested in the logistics field. Bain Capital Ventures also backed Kiva Systems. Kiva Systems is now Amazon Robotics, and its robots power the e-commerce giant's warehouses.
“That investment showed us very strong tailwinds that are still there today. The move towards e-commerce is reordering supply chains and logistics and consumer expectations for them,” he said. said. “Over the years, we've come across teams trying to tackle this problem, and we feel there's a huge multi-billion dollar opportunity here that still needs to be realized. .”
Bain also led Palette's $3 million seed round and has now decided to double down by leading the company's Series A as well. The round includes Bessemer Venture Partners and Activant Capital, as well as Zach Frankel, Toast founders Aman Narang and Steve Fredette, Dutchie CEO Tim Barash, and Home Depot board member Manuel.・Angel investors including Mr. Cadre and John Curtius, a partner at Cedar Capital, also participated.