Axios Mobile Assets Corp., a composite pallet pooling provider, has issued an update for the third quarter ending September 30, 2016. Highlights of Q3 include the following:
- Secured $3 million loan for working capital and general corporate purposes, and an additional $2 million loan to build tooling to increase pallet production capacity;
- Pallet issuances (rentals) were estimated to increase by approximately 85% over the previous quarter due to the start of the implementation of our largest egg vendor contract that was announced on May 26, 2016;
- Completed roll-outs for its largest retailer’s U.S. Mid-West and North-East regions;
- Expanded into its largest retailer’s U.S. South-East and South-Central regions;
- Secured a lease for new pallet washing facility in Atlanta area, and;
- Began a pilot of active pallet sensors, which will enable it to track and trace actionable data for clients’ products through the supply chain.
“The third quarter’s operational milestones generated increased interest in Axios from customers and prospects,” said Richard MacDonald, Axios’ President and CEO. “Our ability to secure capital allowed us to meet some of the increasing demand for our products, and we are confident that we can continue to drive revenue growth and improve operational efficiency in Q4 and beyond.”
Pallet Issues Expected to Increase by 85%
Axios secured a $3 million loan on July 22nd, 2016, which financed working capital and general corporate expenses as the company drove increases in its pallet issuances and expanded its pallet issuances to new customers and regions. Axios expects that the number of pallet issuances in Q3 will increase by approximately 85% over the previous quarter.
During Q3, the company also secured a $2 million loan from Export Development Canada. Loan proceeds will be used for additional tooling that will increase production capacity, a new assembly line, and for equipment needed to open additional pallet wash facilities. The Company expects that these expenditures will lay the foundation for continued growth and help Axios drive toward profitability in the future.
One of the main drivers for adoption in recent months, as cited by both egg vendors and retailers, has been the Safe Quality Foods (“SQF”) certification that Axios has received for the wash/sanitization process at the Ohio wash facility (announced April 14th, 2016), which ensures a bio-secure pallet delivered to client production sites. The certification was granted following a third-party audit of the sanitization process and facility in Ohio. Axios also intends to seek SQF certification at each new wash facility it opens to ensure consistency of biosecurity qualifications across its entire pallet pool. Axios has the only pooled pallet service and offering to wash/sanitize its pallet after each and every use.
With the roll-out of the Mid-West and North-East regions completed, Axios is now driving into the South-East and South-Central regions of the United States. All of Axios’ largest retailer’s distribution centers in these areas are supplied by vendors currently under contract to Axios. Therefore, as Axios continues its expansion into these areas, it expects that all additions to the Axios pallet inventory will quickly flow into the circulation and begin producing revenue.
Axios has secured a lease in the Atlanta area and is working to install wash/sanitization equipment at that facility. Once operational, this will be the third wash/sanitization facility being used by Axios, in addition to two existing facilities in Ohio and Pennsylvania, which service the Mid-West and North-East regions respectively. Axios plans to begin the process of opening additional wash/sanitization facilities in both Texas and Florida after Atlanta is operational. Having additional wash facilities will decrease the average mileage required to fulfill each pallet rental, which the Company expects will result in an increase in the frequency of pallet rentals and a decrease in logistics expense per rental.
The steps that were taken during Q3 – specifically, borrowing to invest in production equipment and to work to open additional wash facilities — are consistent with management’s goals to reduce pallet production costs and logistics expenses as the Company works toward achieving profitability in the future.
The product and service offering has been and continues to be met with highly favorable reaction, and the conversion of the egg producers to the Axios Solution has been steady and ongoing. Axios now has 10 service agreements in place with fresh egg producers in the U.S. Axios has captured 4 of the top 5 and 10 of the top 40 largest U.S. egg vendors.
One of the key value components of the Axios solution is the mitigation of risk to cold chain products as they are transported through the supply chain. The company’s process of sanitizing pallets after each use decreases the risk of food-borne illness and assists in the production location’s biosecurity efforts and protocols against the spread of pathogenic diseases like avian influenza. This also improves the safety and stability of the supply chain for retailers who manage a large and complex vendor base for their supply of cold chain food products.
Building upon the availability of actionable data and the Axios Internet of Things (“IoT”) Solution, Axios has begun introducing an active sensor into the pallet and is currently piloting a trial at one of its contracted vendors. The sensor is expected to provide impactful measurements and readings of data such as shock, vibration, and temperature, and it has the potential to replace the RFID functionality that currently manages the track and trace element of the pallet service. It is also expected to provide the data points for carbon credit measurement, in keeping with the Axios carbon protocol (VM0020).
Upon successful completion of the active sensor pilot, data services will be sold at a premium to the base rental rate on a per pallet rental basis. Axios believes that the data and software services, in combination with its pallet pooling and logistics services, will be a future driver of growth and profitability for it.
Source: Axios Mobile Logistics