Paxafe, a platform using AI and machine learning to classify and contextualize supply chain data, today announced it has raised $2.25 million. The startup says it will leverage the funds to support the rollout of its platform and further develop its AI technology.
Historically, a lack of visibility throughout the supply chain has resulted in product losses and operational inefficiencies. The problem is quite the opposite today, with an abundance of data from sensors and aggregator platforms providing shippers, carriers, and insurers with key information. But this data doesn’t always drive smarter decision-making, mainly because it tends to lack context and structure.
Paxafe aims to address this with a platform designed for predictive routing, time to arrival estimation, and adverse event prediction for business-to-business shipments. The company delivers the status of goods transported via ocean cargo, air freight, or parcel, relying on a combination of sensors and modeling to provide pricing and insurance coverage for shipments. The software automatically converts sensor data into contextual insights, sending alerts if a shipment experiences potentially harmful deviations.
“While there is no shortage of asset tracking and visibility platforms available, cargo losses keep rising year over year, and cargo loss ratios are not improving,” a spokesperson told VentureBeat via email. “Current solutions in the market are the equivalent of fire detectors — once a problem occurs, they wake up and notify stakeholders that something is wrong. What they cannot do is actually diagnose the ‘how’ and ‘why’ behind that particular event of interest. Without a precise and automated diagnosis, business-to-business shippers find it virtually impossible to build accurate and consistent prediction models that enable supply chain risk mitigation across future shipments.”
Paxafe claims its “adaptive insurance” calculations factor in critical supply chain factors, as well as confounding variables like weather and traffic. The platform also considers things like the product being shipped, the number of stops along the route, the time of the shipment, and the mode of transportation.
Supply chain challenges have been amplified during the pandemic. For retail, it’s estimated that inventory is accurate just 63% of the time, on average. But stakeholders with superior visibility into their supply lines consistently outperform the competition. Seventy-nine percent of companies with high-performing supply chains achieve revenue growth greater than the mean within their industries, according to Logistics Bureau.
Despite this, Paxafe says that over the past six months it has embarked on a series of pilots with enterprises across health care, perishables, oil and gas, logistics, manufacturing, jewelry, and insurance verticals. The company also launched a commercial version of its platform, converting a number of its pilot customers — about 10 so far — to commercial partners.
“Paxafe was prelaunch when the pandemic hit, so it didn’t have a material impact on customer operations — more so on planning, fundraising, and go-to-market strategy,” cofounder and CEO Ilya Preston told VentureBeat in an email interview. “The pandemic has only reinforced the demand for technology visibility platforms like ours, given the pandemic’s impact on various supply chains — from product integrity and temperature control requirements for the vaccine itself to all of the lead time increases and delays that [are] impacting customer inventories, product availability, [and] time of arrival.”
Ubiquity Ventures led Paxafe’s seed round announced today, bringing the Milwaukee, Wisconsin-based company’s total raised to date to over $3 million.
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