Toronto-based shipping logistics startup Portless has raised $18 million USD ($24.7 million CAD) to help retailers avoid rising costs as they contend with a volatile trade war.
The startup raised its latest round of financing on the assumption that the “de minimis” exemption would be eliminated.
San Francisco, Calif.-based Commerce Ventures led the all-equity, all-primary Series A round, with participation from fellow United States (US) investors FJ Labs, eGateway Capital, Red Swan Ventures, and Ground Up Ventures. The deal closed in February, when US President Donald Trump signed his first of a slew of executive orders to impose blanket tariffs on imports from Canada and Mexico, kicking off a tumultuous period for North American retailers.
Portless is a supply chain logistics company that offers a direct shipping solution to its direct-to-consumer (D2C) retail clients, who are mostly in the US and Europe, that circumvents up-front import duties.
Instead of the traditional retail model, where duties are paid up-front when large shipments by sea reach the US from China, Portless is offering a model popularized by e-commerce giants Shein and Temu: direct air transport for small shipments that have already been sold to customers.
Portless operates a fulfillment warehouse in Shenzhen, China, which it says is a maximum of two days from all Chinese manufacturing plants. It charges customers to fly their products overseas and covers import costs that will be paid back later.
“We lay out money for duties when the order passes the border and brands pay us back,” Portless CEO Izzy Rosenzweig told BetaKit. “They only need to pay duties when the goods are already sold and cross into the US, giving them a massive tax deferment advantage.”
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This isn’t Rosenzweig’s first foray into shipping logistics. The CEO previously founded Browze in 2012, which began as an importer, then pivoted to an online marketplace that offered retailers curated lifestyle products from factory suppliers through a digital platform. By 2021, the startup had raised a total of $13.5 million USD (then $16.5 million CAD) from mainly US investors.
Rosenzweig said Browze transitioned to Portless in May 2023 following a privacy update from Apple in 2022 that “majorly affected” how the company ran Facebook ads. The pivot from a marketplace to a logistics company leveraged all of Browze’s existing infrastructure, Rosenzweig said, and some employees came along for the transition.
Logistics solutions are in demand for small and medium-sized retailers after the US administration eliminated trade policies they relied on. Retailers and consumer-packaged goods companies, including those in tech, had already been confronting widespread uncertainty related to US tariff threats, leading to higher costs and wasted time. Portless says it mostly serves medium-sized brands with annual revenue between $5 million USD and $150 million USD.
On May 2, the US officially closed a loophole which had long allowed discount marketplaces and small businesses to bring products from China into the US duty-free. Known as the “de minimis” exemption, it allowed shipments of up to $800 of goods to enter the US duty-free per day from China. Though the exemption is still in place for other countries, the US administration has indicated that this could change once it implements systems for tariff revenue processing.
The startup raised its latest round of financing on the assumption that “de minimis” would be eliminated, Rosenzweig said. Portless uses “type 11 informal entry,” for imports worth less than $2,500, to bring products manufactured in China into the US.
Rosenzweig said the company currently serves hundreds of brands and is experiencing 300-percent growth year over year. Portless plans to use the new funding to open new fulfillment centres in Vietnam and India, optimize supply chain operations, and offer quality control services.
Feature image courtesy Portless.