According to Radiant Insights, the unmanned Aerial Vehicles (UAV) market for commercial use is estimated to grow from $151 million in 2014 to $1.2 billion by 2020. A huge potential for logistics providers and indeed many trials are underway many of which try to address last mile needs.
The Last Mile
Postal operators such as Australia Post, Singapore Post and Swiss Post as well as online retailers such as Amazon and Rakuten have all reported testing drones. In addition, Google and Facebook are also testing their own versions.
Meanwhile the large, global logistics providers have also indicated they are studying drones. DHL recently announced a successful trial of its ‘parcelcopter’ in the Bavarian community of Reit im Winkl. Together with its previous trial of drone delivery to the German island of Juist, the service delivers to remote areas that take extra time for cars or trucks to reach. As such, the ‘parcelcopter’ is being integrated into DHL’s supply chain.
The UPS Foundation invested $800,000 to support a global partnership with Zipline, a robotics company and Gavi, the Vaccine Alliance to deliver vaccines and blood in Rwanda. According to UPS’ press release, starting later this year, the Rwandan government will begin using Zipline drones, which can make up to 150 deliveries per day of life-saving blood to 21 transfusing facilities located in the western half of the country.
Security, Inventory & Yard Management
DHL has conducted numerous studies in the use of drones and it predicts that UAVs could provide relief for inner cities, taking traffic off roads and reducing congestion. Microdrones GmbH further noted the use of drones in intralogistics. For example, UAVs could support intra-plant transport as well as supplier to plant emergency deliveries. Inside the warehouse is another area of opportunity for drones.
A provider of supply chain execution solutions, PINC has incorporated UAVs in its yard management and warehouse management solutions. The UAVs perform asset management tracking, location monitoring and cycle counting.
The security of cargo is also a major concern. Polish freight carrier PKP Cargo has trialed security drones to help protect goods on rail network. PKP Cargo believes the drones have been responsible for a 44% reduction in number of thefts on network in first half of 2015. Likewise, Abu Dhabi Ports Company has also utilized UAVs to strengthen security and safeguard ships with high-value or sensitive cargo.
Efficiency on the Sea
Even the ocean freight market is studying the use of drones. Maersk typically relies on a fleet of auxiliary ships and barges to supply the large ships with such items as fuel and food when they are in port. In January, it test flew a drone from a tugboat to a tanker off the Danish island of Zealand. Maersk sees other potential uses for drones. For example, during travels, drones could deliver parts to a ship with engine trouble, or other vital goods. Currently, helicopters and airdrops from longer-range aircraft are often the only option for emergencies at sea. Drones could also be carried on board and be used to make periodic hull inspections or perform other similar services.
Our not so scientific survey indicated 39% of folks believed drone use depends on regulations. Regulations, if any, vary from one country to the next. The US’ FAA is expected to publish requirements in June but as of late 2015, it had approved more than 2,100 exemptions allowing for commercial drone testing and use. In October 2015, Wal-Mart applied to U.S. regulators for permission to test drones for home delivery, curbside pickup and checking warehouse inventories hoping for one of the exemptions.
Lack of privacy, cybersecurity and air traffic control is among the other concerns for drone usage. Delivery costs may be another concern for consumers. A Genco blog post highlighted potential costs. “Businesses will have to charge a significant premium for this kind of delivery, so the products would need to be worth a $100 to $200 delivery fee for a five-pound or so package,” according to one MIT professor. In one example, MIT Review referenced California startup Matternet which used drones to supply Haitian refugee camps with goods. The company discovered it costs about 10 to 70 cents to deliver a 4.4-pound package 6.2 miles – about five times cheaper than a conventional truck delivery.
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