Ripple Extends Pentagon Freight AI Deal as Hormuz Risk Reshapes Dubai Logistics

Freight technology firm Ripple is extending its AI partnership with Dubai-based forwarder Pentagon Freight, combining global customs AI intelligence with bespoke software development to manage import and export flows for oil and gas companies operating near the Strait of Hormuz.

The deal, announced by Ripple co-founder and CEO Adrian Smith on FreightWaves Today, lands in a logistics environment shaped by drone attacks near Dubai's airport and persistent uncertainty around Hormuz shipping lanes. Pentagon Freight and similar operators are already rerouting shipments to alternative ports on the other side of the Arabian Peninsula to keep cargo moving.

"Business goes on as normal," Smith said. "These guys are very resilient. The oil and gas industry is very resilient, but there is uncertainty and there are safety issues as well."

The expansion signals that geopolitical disruption is accelerating demand for real-time inventory visibility in contested trade corridors — and that forwarders serving energy clients are willing to pay for AI built around their specific workflows rather than off-the-shelf tools.

Why is the CEO warning against frontier AI models?

Smith's core argument is blunt: most companies deploying AI spend too much and get too little, because they reach for the most powerful — and most expensive — models regardless of the task at hand.

"If you're ordering a pizza from your favorite pizza store, and when it comes to the delivery option, they say, oh, we can deliver this by helicopter for you," Smith said. "Was it needed? Most probably not."

The token economics don't lie. "Sometimes it's not necessary to use AI. People just rush to AI, but then their token cost goes through the roof," Smith said. "And if you're using high-cost tokens and your token volume goes through the roof, but your return on using that AI process is minimal, then it's not going to be a business case that's going to stack up for those organizations."

For shippers and forwarders weighing AI budgets, the message is a discipline check before a procurement decision.

What's the method for matching AI spend to the task?

Smith advocates a Lean Six Sigma approach, and the sequence matters:

• Map the full value stream of a business workflow
• Identify manual steps and software inefficiencies
• Match AI model intensity to the criticality of each task

High-acuity frontier models get reserved for genuinely complex decision points. Lighter, lower-cost models handle routine administrative processes. The cost differential between those tiers, Smith said, is significant.

In practice, that means customs classification, inventory visibility and import-export workflows near Hormuz — the exact scope of the Pentagon Freight deal — sit at different points on that intensity curve, and paying frontier prices for the routine end of it destroys ROI.

What about data security?

Smith warned that companies feeding sensitive business prompts directly into commercial platforms like OpenAI or Anthropic's Claude risk eroding proprietary assets. His alternative: open-weight models deployed on a company's own infrastructure — what he called "building your own pizza oven" — so unique business data never leaves a controlled environment.

That position carries commercial weight for logistics operators whose rate data, customer books and customs records are competitive assets. Handing them to third-party platforms in exchange for convenience may cost more than the subscription price.

What comes next for AI adoption in logistics?

Smith said the maturity curve for AI adoption in logistics is accelerating. The next phase hinges on companies treating their own data as a strategic asset: auditing incumbent SaaS providers, consolidating data into accessible repositories, and retaining control over that data as AI tooling evolves.

Without that foundation, organizations stay dependent on off-the-shelf solutions that are rarely the right fit for the specific workflows of individual freight and logistics operators. As rerouting around the Arabian Peninsula becomes routine for oil and gas shippers, expect demand for bespoke, data-controlled AI to keep climbing alongside it.