According to Radiant Insights, the Unmanned Aerial Vehicles (UAV) market for commercial use, which includes uses in drone logistics, is estimated to grow from $151 million in 2014 to $1.2 billion by 2020. UAVs offer huge potential for yard management and 3rd party logistics providers. Many air drone logistics trials are underway 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 like 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’ logistics drone in the Bavarian community of Reit im Winkl. Together with its previous trial of drone delivery to the German island of Juist, the carrier 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 a 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 drone logistics, 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, air drone logistics 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 and pioneer in drone logistics, 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 tested security drones as a means to help protect goods on rail networks. PKP Cargo believes the drones have been responsible for a 44% reduction in the number of thefts on rail networks in the first half of 2015. The 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 drone use in logistics. Maersk typically relies on a fleet of auxiliary ships and barges to supply their larger 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 vital supplies.
Currently, helicopters and airdrops from longer-range aircraft are often the only options for emergencies at sea. Drones could also be carried on board and 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, but regulations, if any, vary from one country to the next. The US FAA is expected to publish air drone logistics requirements in June 2016, 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 those exemptions.
Lack of privacy, cybersecurity, and air traffic control are among the other concerns for drone use in logistics. 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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