With giant companies like Amazon and Google professing and promising drone delivery and a science-fiction world ready to unfold in front of our eyes, we have to attempt at least to find an answer for the following question: the drones may be ready to take off, but is the logistic industry ready to embrace them. We will look at recent reports and analyze the situation to understand better how drones reshape the world and the industry.
The Future of Logistics and the Future of Drones
According to research and reports, the global logistics market’s worth goes over $4 trillion, closing into $5 trillion (about 10% of the global GDP), with the transportation industry ranking among the fastest-growing, biggest revenue-generators worldwide. An industry this size is in a permanent race to become better, more efficient, and stronger by the minute.
From this point of view, technology is logistics’ best friend and most trusted companion, since we invented the wheel. Nevertheless, wheels seem obsolete, giants like Amazon, UPS, and Google tell us. We have conquered the ground, not we have to conquer the air.
While Amazon made and kept the headlines with its plans of 30-minutes drone delivery, other players began to pour in the arena, as drone delivery may change not only the future of logistics but the future of humankind as well.
And yet, we do not see the skies buzzing with flying robots bringing us our groceries or delivering us our pizza. Everybody speaks using words like “may,” “would,” “could,” and “should,” but drones, even if they are ready to fly, they are still in their experimental phase. Why is that?
The Logistic Industry Still Has to tackle a few (Major) Issues
Some headlines promise you will have an entire world delivered to you by drone – maybe next year – while others tell you to refrain from believing in science-fiction stories. The truth is somewhere in the middle, as always.
Big companies experiment with drones, but there is a huge step from trials to implementation. One of the problems is the supply chain and the economics of drones.
Drones promise a handful of things:
- Reduce labor costs;
- Cut down traditional transportation costs (with vans for instance), while giving a helping hand to the environment in the process;
- Reduce the costs per delivery;
- Instantly gratify customers – thus pushing revenues towards the industry, and so on.
However, despite these promises, major retailers and the logistic industry itself still has to manage some inherent problems in the supply chain.
- How can drone delivery be more economical than truck delivery if the drone can carry only one small package at a time and not carry anything back to the warehouse to compensate some costs?
- In order to comply with the rule of last-mile deliveries (to keep the costs low and drone delivery economically efficient), drones should satisfy the following conditions: drop off multiple light packages (ideally less than five pounds) at the same location and perform deliveries on short distances (ideally no more than 10 miles).
- Drones should satisfy all these conditions within the FAA regulations, which require drones to travel within the line of sight of a human operator;
- In correlation with the facts above, the logistics industry should create, build, and efficiently implement a sophisticated automated drone and delivery tracking system – in a sky buzzing with flying robots all deliveries need a completely new take on the traditional tracking management systems on both ends. Even if NASA is working on such a system, together with drone industry leaders and the FAA, we are still in the theory phase of the research, with some results promised for the 2020-2015 period.
Until NASA helps the logistic industry navigate the future, the logistics industry may need to take a lot of money out of its pocket to make drone delivery economically efficient in the last-mile department. If a drone saves everybody’s money on short distances and with small/light packages, it means the drone needs to be in the proximity of a warehouse.
To Build or not to Build?
In other words, most companies should (that word again) pay upfront for the building of supply centers and warehouses all over the areas they want to serve. Besides the investment in the buildings themselves, such projects also imply hiring a new workforce, paying maintenance costs, buying technology, and change the game.
On paper, the building of supply centers can boost the economy of a city or a community, but what can the logistic industry do when it has to build in rural and remote areas with little to no infrastructure (the very areas ripped for drone delivery)?
While for companies like Walmart this may seem a small price to pay – as according to the company, 70% of Americans live within five miles of a Walmart store – you cannot say the same thing about Amazon or others. And what about international deliveries? Are companies ready to expand overseas, build in other countries, open offices, and comply with national regulations, taxes, and laws?
Last but not least, drones have to fly no matter the season. Is the logistic industry ready to acknowledge the fact that winter is coming? Can they efficiently and cheaply fly drones in cold weather, during blizzards and storms, under winds, freezing temperatures or melting heats?
Amazon, as usual, has another brilliant idea: it wants to build “fulfillment centers” – beehive-like structures to host, send, and receive delivery drones. Moreover, some cities took things into their own hands and started to introduce drone delivery in their urbanistic plans.
UPS Has the Better Idea
UPS wants to embrace the best of both worlds of truck delivery and drone delivery: a van/drone duo. Back in 2017, UPS did a test run and found the results highly pleasing. Instead of building warehouses, centers, facilities, and offices, UPS puts the drones in the vans together with the packages.
Then, for the last mile or so, the drivers send the drones to their destinations – easy, fast, cheap, and extremely efficient regarding time and money investments. After the drone delivers the package, it returns to the truck where it finds its charger and waits for the next delivery.
In other words, instead of vans or drones trying to access the middle of nowhere, companies can send their drivers to the edge of nowhere, where, in turn, send the drones to cover the last mile.
You Cannot Have Logistics without the Customers
Besides the costs and regulations of using delivery drones, the logistics industry has to tackle probably the biggest issues of them all: the customers.
First, the customers should get some software, pads, technology, etc. to communicate efficiently with the provider and confirm the drone delivery while tracking it. The industry still needs to come up with an automated tracking managing system at its end so it will take a while until we get the same automated device/software/website at the customers’ end.
Secondly, the industry needs to solve the privacy issue that drones throw at our modern world. Let aside conspiracy theories and Skynet; you need time to convince people that the flying robot does not pose a threat when it hovers out and about our properties or apartment windows.
Thirdly, it seems that 75% of people still want to see a delivery person coming out a delivery van. People still need to see other people bearing smiles, friendly chatter, and logos representing something they know and trust.
It is one thing to call a company asking if the courier got lost with our package, and a whole other asking whether the drone we expect got lost or was shut down from the sky by the vengeful neighbor with a rifle and an itch. Unlikely, but crazier things have happened.
Is the Logistic Industry Really Ready for Drone Delivery?
The honest answer to this question is: partially. We have our fair share of successful experiments. People in remote and challenged areas do receive medication and supplies via drone delivery. Dominos’ sent pizza and UPS tests the van/drone duo with costs it has to include in the future business plan. But are we going to see all our packages pouring out of the sky? Not today.
About the author: Mark Chesterman is a drone aficionado and a technology enthusiast. He spends his time trying out different gadgets and being up-to-date to everything that's happening around him. He loves photographing nature and taking aerial shots, but also writing the story behind them. When he's not using his camera, he puts his writing skills to good use by putting together comprehensive drone reviews on Droneista.com.