Drones may be fast but commercial implementation will be slow

The Savills Blog

Drones may be fast but commercial implementation will be slow

Are drones the solution to last mile delivery utopia? With 30% of total transport costs absorbed in last mile delivery, millions of dollars are being poured into research and trials of drone delivery across all corners of the globe.

Video | Drones may be fast but commercial implementation will be slow

There is no doubt that drone delivery will eventually become an accepted part of the transportation infrastructure in Australia.

However, it will probably be more limited than many proponents claim, and it is likely to take a lot longer than expected to become mainstream. For example, despite ongoing testing, Amazon has already missed Jeff Bezos’ 2018 deadline to begin commercial drone deliveries in the US. 

Tests are in various stages by a number of companies such as UPS, DHL and Dominos, and in locations ranging from Iceland, Switzerland, the UK, the US and here in Australia. While they have created a lot of interest, they have not yet translated into widespread availability. 

There is also the issue of how much consumers really want their purchases delivered by drones – studies in Australia and in the US found an even split between consumers who like the idea of drone deliveries and those who didn't. Over 35% in both studies found that consumers worried that drone deliveries might not be safe.

Turning the drone vision into reality

At a minimum, successful implementations of full-scale commercial drone delivery will require better planning, better-thought-out business cases, more robust and efficient drone technology, and significant advances in flight control, regulations and autonomous flight.

Here in Australia, Wing (a subsidiary of Google's parent company Alphabet) is trialling a drone delivery service in an outer suburb of Canberra. To date a number of companies have signed up to the trial, with products such as ice cream, coffee and golf equipment being delivered. It should be noted that the trial area is restricted to only a few hundred homes and a number of issues need to be overcome before full-scale commercialisation of drone delivery is viable, including:

  • The range of the drone is limited to being visible at all times to the drone pilot (which is not the case in other countries such as Iceland and Switzerland)
  • The drone can't cross major arterial roads
  • Not all residents can provide safe landing areas for drones
  • Residents are already complaining about the noise
  • Delivery hours are very limited
  • Packages can only weigh a few kilograms
  • Drones can only make single deliveries on a run, compared to multiple runs by a traditional delivery van

There are markets where the testing of drone deliveries is advancing to full commercialisation, but limited to specific product types.

US based logistics company Matternet announced a permanent autonomous drone network in Switzerland that will now see lab samples like blood tests and other diagnostics flown between hospital facilities, clinics and labs. The first delivery network will be operational from mid-2019, with several more to be introduced in the following year. According to the company, medical items can be delivered to hospitals within 30 minutes.

Users operate the system via an app to create shipment details. Items are placed into a compartment box in the station before being loaded into a drone for delivery. Currently the drones can hold up to 2kg. Packages are then flown to another Matternet station, where receivers can obtain their package by scanning a QR code.

It appears that drone delivery for time critical uses such as medical applications will be the first scalable delivery services.

Autonomous Vehicles 

Autonomous vehicles are the most immediate solution to a commercially viable option to reduce last mile delivery costs, and potentially the total transportation cost bucket.

According to GlobalData, autonomous vehicles will be the main source for all deliveries in the future, not just groceries.

The use of autonomous vehicles allows grocery retailers to save on hiring and paying drivers, alongside providing them with an opportunity to increase the number of possible deliveries.

FedEx has partnered with companies like Walmart and Pizza Hut to test last-mile delivery robots. The logistics company is teaming up with DEKA Development & Research for its project. The battery-powered robots look like boxes on wheels and travel at a top speed of 16km per hour.

Generally travelling on footpaths there are also some limitations but they do not seem as significant as those facing drone deliveries.

If the future of last mile logistics is drone delivery and autonomous vehicles, then the future is almost here.

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