Drones: An In-Depth Guide to Success

benefits of drone delivery

“Drone Delivery Services are Actually, Finally Almost Here,” a headline in Wired proclaimed in April.

The writer’s words pretty well describe the delivery industry’s feelings about drones. We’ve been hearing about them, and the revolution that futurists say they will bring, for the better part of a decade. But only in 2019 have commercial drone applications come to fruition.

In March, UPS became the first third-party package delivery company to complete a commercial delivery via drone. In partnership with drone technology company Matternet and state and federal regulators, UPS began delivering medical samples on a hospital campus in Raleigh.

In April, Wing, a Google spinoff, became the first to receive an Air Carrier Certificate from the Federal Aviation Administration, which allows it to legally make commercial deliveries via drone. The certification will also make it possible for Wing to conduct the kind of tests necessary to find out whether a drone delivery business is truly practical, such as flying outside the pilot’s line of sight.

Like the UPS-Matternet service, Wing partnered with local regulators — in this case, the Virginia Tech Mid-Atlantic Aviation Partnership — to make its case to the FAA. Wing’s approval comes only after “thousands of deliveries to hundreds of testers around the world.”

The next day, drone technology company Zipline launched a vaccine drone delivery service in Ghana, which can make as many as 600 drone flights to 2,000 healthcare facilities on demand.

And in May, a drone at the University of Maryland delivered a kidney from a donor to a transplant recipient.

“Commercial delivery is one of the most significant ways that the public is going to interact with drone technology on a routine basis,” Mid-Atlantic Aviation Partnership director Mark Blanks told Robotics Business in an April article. “But until now there hasn’t been a clear pathway for traditional aviation regulations, which were designed for manned aircraft, to accommodate it. That’s why this certificate is so significant… it’s also a milestone for the industry because it demonstrates that there’s a way to do drone delivery under the current regulatory structure.”

Drone delivery could offer third-party parcel carriers a robust last-mile delivery option. Delivery to residential areas is inefficient, which makes it expensive. As customer habits evolve toward placing smaller orders — one or two items at a time instead of three or four — more frequently, those challenges have been exacerbated. And those trends show no signs of changing. A 2017 industry report predicted that demand for urban freight delivery grow 40% by 2050.

Every forward-thinking package delivery company is experimenting with last-mile solutions, including couriers on bikes, package delivery robots, and, of course, drones.

Drones excel in urban and suburban areas because they can carry small, lightweight parcels on short trips. For parcel carriers, drones offer the opportunity for on-demand deliveries, as well as all the other advantages of automation — they don’t require wages, benefits or breaks. For the rest of us, drones don’t create any additional highway traffic, and their carbon footprint is much lower than that of trucks.

Technologists have had drones for years. They’ve probably been capable of making deliveries for years — indeed, Amazon has been testing Prime Air in private trials in the United Kingdom since 2016. UPS has started using drones at its facilities in Denver as a security measure. And drones have been making deliveries in Iceland and Switzerland since 2017.

But U.S. airspace is closely regulated. And until regulators catch up, putting drones to true commercial use is impossible. For that reason, the agreement between UPS, Matternet and North Carolina was significant, and the operational waver that Wing received from the FAA even more so, because it is so much more far-reaching — it allows drones to fly beyond the pilot’s line of sight and in a much larger area.

If drone delivery is actually, finally almost here, it’s time to take a close look at what this big technological shift would actually, finally mean for the package delivery industry — and what the advantages and disadvantages of drone delivery would mean for your business.

What is a drone, anyway?

“Drone” is the common name for an unmanned aerial vehicle, or UAV. Like many technologies, they were initially designed for military use. Some were as small as backpacks; others could be as large as small airplanes.

In the last decade, however, small drones have become commercially available. They’re popular with photographers and videographers seeking high vantage points. Fire departments and disaster response agencies can use them the same way.

As drones get stronger, more versatile, and cheaper to manufacture, more and more industries are trying to understand the new capabilities drones might offer — including, of course, shipping.

How are drones operated?

Drones are operated remotely by human pilots. In the field, pilots typically stand on the ground and watch drones fly. But more and more of them are working from control rooms with wireless network links to the aircraft.

In some applications, drones do not need human pilots at all — they just adhere to routes that have been programmed into their operating systems. These advanced machines rely on GPS and satellite technology to follow routes and internal sensors to avoid obstacles. In agriculture, for example, a fertilizer-spraying drone may be able to fly up and down lines of crops on its own.

Most commercial drones are rotary drones, which are able to fly because of the rotating propellers that sit horizontally above or below the payload. These blades give drones the ability to move up, down, forward and backward, stopping and turning almost on a dime to avoid obstacles or change course.

How fast and how far can drones travel?

Matternet, the Silicon Valley-based company partnering with UPS on the North Carolina commercial drone project, makes a drone that can carry payloads of about 4.5 pounds over a distance of about 12.5 miles. A 2017 story in TechCrunch said this drone could travel about 22 miles per hour. After that, its lithium ion battery needs charging.

Amazon Prime Air said in 2014 that its drones could travel up to 30 miles at speeds of 50 miles per hour, meaning they could have made 30-mile trips in just 36 minutes. However, the Prime Air program has largely gone quiet, so it’s hard to verify those numbers.

That may not seem like a lot of distance. But according to Walmart, 70 percent of Americans live within five miles of one of its stores — putting them, theoretically, within drone delivery range.

The drones that are currently closest to market can only carry lightweight packages and with a maximum size roughly equivalent to a pizza box, according to Forbes.

So while they won’t be delivering Ikea furniture or full loads of groceries anytime soon, they could take care of many of our single-item purchases. Amazon says that 86% of its packages weigh less than five pounds.

The promise of drone delivery is that of DoorDash, Postmates and other delivery courier services: Order something small and have it on your doorstep later that day. Early deliveries will be limited to urban areas, since travel distances are so short. And drones will likely only be able to make one delivery at a time, which could result in wait times based on demand.

What technical difficulties do drones face?

Drone technology is still far from perfect. Researchers are constantly working to make drones lighter, stronger, and faster, as well as to confront security concerns.

For example, Wired reported in April that Chinese drone manufacturers dominate the market. But because of security risks, the U.S. government prohibits the use of drone operating systems designed in China. For package delivery companies to be able to purchase drones en masse, another manufacturer will have to find a way to make them as affordably as Chinese companies can. Wired reported that Auterion, a Swiss technology company, is working with GE Aviation and a division of the U.S. Department of Defense to launch an open-source autonomous-control program for drones, which could be used by any drone manufacturer to kickstart development.

Drone navigation systems aren’t perfect, either. According to Wired, Wing uses machine-learning algorithms to avoid trees, power lines and buildings as drones approach their destinations, and Zipline uses “ballistic parachutes” to protect its drones if they collide with something.

And if one or two of a drone’s rotors become disabled, most models spin out of control. Another Swiss firm, Verity Studios, has developed an algorithm that allows drones to be piloted while spinning. The operator can manually land the drone or order it to return to its point of origin.

Writing in Forbes, Brian Foley notes some additional social difficulties that drones face. They make noise, typically a low hum or whirr; communities like homeowners associations may wish to ban them to prevent noise pollution. Neighbors may also have privacy concerns as drones fly overhead.

How exactly will drone delivery work?

Because commercial drone delivery has only just begun, there’s a lot we don’t know about how it will play out.

But based on drones’ mileage and speed limitations, package delivery drones will be limited to last-mile deliveries — the final leg of the journey from a fulfillment center to a customer.

The last mile has long been the most expensive and inefficient part of the delivery process for parcel carriers. Instead of moving trucks full of goods over hundreds of miles in a matter of hours, a driver has to stop at each address, get out of the truck, select the right package, carry it to the door, and, in some cases, knock and obtain a signature. If the customer isn’t home, they may have to bring it back the next day and try again.

Some technological innovations have improved the package delivery process. UPS, for instance, has continually updated its software, optimizing routes in real time so drivers make fewer time-wasting left turns. But truly disrupting the last mile will require new delivery vehicles altogether.

Both FedEx and Amazon have begun testing package delivery robots. The approaches differ slightly — FedEx owns the robots and sends packages out to customers, whereas Amazon customers own their own robots and send them to pick up their packages. Both robots could either be dispatched right away, allowing for same-day or even same-hour delivery; they could also fill in last-mile delivery gaps in place of trucks.

Drones will likely work in a similar way.

In the UPS-Matternet pilot at WakeMed, drones move medical samples, so these are on-demand deliveries. Doctors order samples sent over. A drone is flown to the origin point, people load it with the necessary supplies, and the drone is piloted to its destination. The UAVs can cross the WakeMed campus in as little as three minutes.

In the future, when drones are integrated parts of delivery systems, they could support delivery services in making last-mile deliveries. Hypothetically, imagine an Amazon warehouse in an urban area. Amazon’s delivery network could move goods the way it normally does, leaving them in the fulfillment center nearest to the customer’s home for the final leg of the delivery. Then drones could pick up those packages and carry them to customers, replacing trucks.

In the long run, it’s possible that these fulfillment centers could look like supermarkets, stocked with essential and popular goods. Customers could log on to Amazon, Walmart or another retailer’s website, order what they needed, and a drone could pick up that item and bring it to their home or workplace for delivery.

Additionally, a Leverage executive suggested in Forbes in 2018 that drones and delivery trucks could be used in tandem. A truck could be loaded with packages and driven — by a human driver or autonomous technology — to a certain neighborhood or ZIP code. Then, drones could deliver packages from the truck to customers’ homes. Though this arrangement would add an extra step, it could take advantage of the benefits of drone delivery without requiring the UAVs to make too many lengthy flights.

Delivery drone economics

Last-mile delivery is inefficient for two key reasons: Routes aren’t dense enough and customers order too few packages. The cost per stop is too high.

Drones solve neither of those problems.

Currently operating drones can only carry one package at a time, which means they can only make one stop. Then they have to fly back to the fulfillment center, or another home base, to recharge and pick up their next parcel. By comparison, the average UPS truck makes 120 stops per day.

Only a handful of economists have tried to analyze drone air freight costs. An ARK Invest report estimated that Amazon would spend 88 cents on each Prime Air delivery. The company could charge just $1 per delivery and still make a profit — while reaping the benefits of offering same-day delivery.

The ARK Invest report includes a number of estimates for how much things in the drone-driven economy will cost. Tasha Keeny, the author, offers ballpark figures: Amazon pays 6,000 drone operators $50,000 per year. This team operates a fleet of up to 40,000 drones. Each drone makes 30 deliveries per day. Amazon could make 438 million deliveries per year — but at fairly slim profit margins.

Part of the reason that Amazon has been as successful as it has, and grown as significantly as it has, is that it didn’t make a profit for about two decades. The company is large enough to aggressively invest capital in technological advances like widespread drone adoption.

UPS may have beaten Amazon to the commercial drone market, but it’s a publicly traded company with a unionized workforce. It likely can’t afford to wait for profitability in the same way that Amazon could.

What drone delivery will look like for shippers is hard to predict. Currently, carriers pass the cost of same-day and next-day shipping on to shippers by charging higher rates for those services. Shippers then typically pass those costs on to customers. Drones could be priced similarly — and that could be true even if drone delivery is ultimately cheaper than alternatives. The novelty alone, at least in the first decade, may make customers more willing to spend.

And, currently, drone delivery is most likely to compete with to Postmates and other on-demand courier services. These often cost $10 or more on top of the cost of the goods — and more if the service is specialized, as it would likely be for medical supplies. If drone delivery were to undercut that even slightly, delivery fleets with drones could be pulling in significant profits.

Environmental impacts of drone delivery

Drones are battery-powered. Battery-powered vehicles, including electric trucks, have significantly less impact on the environment than diesel-powered trucks. That makes drones, effectively, a zero-emissions last-mile delivery option — except for the energy required to charge those batteries. In regions where electricity is still generated from fossil fuels, charging those batteries still generates carbon emissions.

Additionally, if drone delivery requires the construction of new warehouses that employees have to drive to, drone delivery could have some secondary emissions impacts.

A 2018 study from the Lawrence Livermore National Laboratory, including researchers from Carnegie Mellon University, SRI International and the University of Colorado – Boulder, found that, on average nationwide, delivering a package via truck generates about 1 kilogram of greenhouse gas emissions. Drone delivery of the same package in California would result in a 54% savings, compared to a 23% savings in Missouri.

Ultimately, the LLNL study found that “small drones were better [for the environment] than any truck or van, whether powered by diesel fuel, gasoline, natural gas or even electricity.”

Additionally, drone delivery has the potential to eliminate other car trips. To take the Walmart example, 70% of Americans live within drone delivery range. If even a fraction of their trips are quick runs for single items, drone deliveries could eliminate those trips — meaning individual drivers don’t have to burn fuel either.

The LLNL scientists summarized: “If you forgot that essential ingredient for tonight’s dinner, our findings suggest it’s much better to have the grocery store send it to you by drone rather than to take your car to the store and back.”

But then there’s the noise.

Garth Paine, an “acoustic ecologist,” wrote in The Conversation in 2018: “I am concerned that drones are taking to the air without a lot of thought for the ears of people on the ground.”

A six-decibel increase in baseline sound pressure levels means that loudness doubles. Paine believes domestic drones can raise baseline sound pressure by 20 decibels or more — meaning that one solitary drone could make a neighborhood eight to 12 times louder.

The FAA recommends that aircraft noise in residential areas stay below an average of 65 dB in any given 24-hour period. A commercial delivery drone clocks in between 75 dB and 90 dB. Constant commercial delivery drone noise would exceed FAA recommendations for safe levels of noise pollution.

Further, drones generate sound at frequencies that people are particularly sensitive to, Paine says, citing a NASA study. As payloads get heavier, drones travel faster, and winds blow stronger, drones get even louder.

John Sung Kim of Fingrprint.io put it simply in Forbes: “Drone-only delivery is not likely until the hardware technology has a semi-quantum leap in noise reduction.”

The state of drone delivery regulation

The Drone Integration Pilot Program was the U.S. Department of Transportation program that selected 10 public-private partnerships to experiment with commercial drone use. In the package delivery world, this was an important step: The federal government was committing to figuring out exactly how commercial drones might work.

Included in that program were the UPS-Matternet partnership with the North Carolina Department of Transportation, which is now flying medical supplies over WakeMed’s campus. Another participant was the Memphis-Shelby County Airport Authority in Memphis, which partnered with FedEx. Amazon, notably, was not chosen for the program.

When the pilot program was announced in May 2018, officials said: “Over the next two and a half years, the selectees will collect drone data involving night operations, flights over people and beyond the pilot’s line of sight, package delivery, detect-and-avoid technologies and the reliability and security of data links between pilot and aircraft. The data collected from these operations will help the USDOT and FAA craft new enabling rules that allow more complex low-altitude operations… address security and privacy risks, and accelerate the approval of operations that currently require special authorizations.”

In November 2018, President Donald Trump signed the Federal Aviation Administration Reauthorization Act. The bill gave the FAA a strict order: Update your regulations by October 2019 to permit drones in U.S. airspace to carry private property, including packages.

According to the League of California Cities, the FAA is in the process of making those updates, which will allow businesses approved as “air carriers” to deliver packages via drone.

The legislation also required the FAA to develop a plan for “full operational capability of an Unmanned Traffic Management network;” codified the Drone Integration Pilot Program that sought to create a shared set of rules for governments to collaborate on drone operations; and created new rules for non-commercial drone operators.

A few small changes have followed since the reauthorization. First, licensed drones are now allowed to fly at night without needing to get additional waivers. And second, the FAA agreed to allow specific drones fly over populated areas — but only drones weighing less than half a pound, which is far smaller than any delivery drones currently in operation.

Why have drones been so cumbersome to regulate? Airspace is closely monitored by the federal government. From the official perspective, flying any aircraft without authorization is dangerous. The pilot, whether they’re in the cockpit or on the ground with a remote control, could encounter other aircraft and force them to change course, putting other aircraft in danger. They could fly into storms and suffer damage. And if they’re damaged, they could fall, putting people and property on the ground in danger.

At worst, unauthorized aircraft represent a security threat. Military authorities may take action to pull these aircraft out of the skies — posing many of the same threats.

Although the Silicon Valley ethos of “move fast and break things” has inspired companies like Uber to operate outside of existing regulatory structures — or in violation of them, depending on your perspective — that doesn’t seem likely to happen with commercial drone use. No company has attempted any implementation outside of government-approved private trials. But participation in government programs, like the Drone Integration Pilot Program, has been competitive and enthusiastic.

And if the FAA does indeed create a codified set of drone regulations for commercial operators in 2019, it won’t be necessary for potential commercial operators to wait much longer.

Advantages and disadvantages of drone delivery

Benefits of drone delivery

First and foremost for shipping carriers, drones offer a way to make on-demand delivery available on a broad scale. Drones can carry small items to customers at any time of day. Free from the constraints of vehicle traffic, they could make those deliveries in a matter of minutes. The rise of courier services suggests that customers have been interested in this option for years now — and are willing to pay handsomely for the convenience.

Second, drones promise the broader benefits of automation. They don’t collect salaries or benefits. Although shipping carriers would have to hire and train drone pilots, they would not actually have to send employees out on these deliveries. Artificial intelligence also tends to make fewer mistakes than employees do.

The few examples of drone delivery that we have also speak to the benefits of drone delivery. Matternet, the company partnering with UPS to transport medical supplies on a hospital campus, has also used drones to delivery humanitarian aid in trials in Haiti, the Dominican Republic, Papua New Guinea, and Bhutan, and to move blood samples to labs for HIV testing in Lesotho (where each delivery reportedly cost just 24 cents).

Drones can transport products to places that are not well-connected to road networks, or where trucks struggle to travel. For e-commerce customers in the developed world, that may mean old cities with narrow streets, cities that have adopted car-free policies on certain days or in certain locations, or gated communities.

Finally, drones seem to offer a way to deliver packages without increasing emissions, especially as the U.S. gets more and more of its electricity from renewable sources.  

Challenges of drone delivery

For now, at least, drone delivery is expensive. Only a handful of companies outside China produce drones capable of commercial deliveries. Most technologies get cheaper and cheaper over time, so this will probably not always be the case — but it’s likely that only large, well-established companies with access to lots of capital will be able to compete in the early drone delivery market.

Second, there’s no existing labor force for drone delivery. Pilots would have to be trained and certified, which is expensive and time-consuming. At the same time, expanding drone delivery capabilities eliminate entry-level jobs in parcel delivery.

Third, there are a lot of questions surrounding autonomous delivery in general. Could drones be hacked and sent to the wrong addresses? Could parcels be stolen or sabotaged en route?

Relatedly, many Americans are nervous about the privacy risk posed by drones flying overhead. If drones could be hacked, could they also be equipped with cameras to invade privacy or engineered to damage property? We might not be able to answer these questions until drone delivery becomes more commonplace.

Finally, because there is no market yet for drone delivery, we don’t really know how much it’s going to cost. There have been few robust studies looking at all the costs of drone delivery — the drones themselves, education and salaries for drone operators, maintenance, depreciation, the energy needed to charge their batteries. No one has tested a price to see what customers will be willing to pay.

It is possible we’re dramatically overestimating or underestimating how much drone delivery will cost carriers, how quickly and widely it will be adopted, or how big its impact on the delivery market will be.

What progress have industry leaders made on drone delivery?

UPS was the first shipping carrier to debut a revenue-generating drone delivery system. The pilot program was created under the auspices of the U.S. Department of Transportation, in partnership with Matternet and state officials in North Carolina, and uses drones to transport medical supplies on the WakeMed hospital campus in Raleigh. Their first delivery was completed on March 26.

FedEx is working in partnership with the Memphis-Shelby County Airport Authority on a pilot program under the same federal guidelines. According to the Memphis Commercial-Appeal, the airport plans to use drones to monitor runways for foreign objects, debris and security. FedEx is using drones for security, emergency response, aircraft inspections and asset tracking at its Memphis headquarters. Other partners are using drones for precision agriculture, medical deliveries, and infrastructure inspections. FedEx had not announced that the program was operating as of May 2019.

Amazon announced Prime Air, its drone delivery pilot, to much fanfare in 2016. But the program has since gone quiet. Amazon was not selected for the Department of Transportation pilot program in 2018.

Drone delivery is up and running in other parts of the world, too. In 2017, Flytrex claimed the title of “world’s first drone delivery service” with a service in Iceland in partnership with AHA, that country’s largest online retailer. Matternet and Swiss Post began delivering medical laboratory samples via drone in 2017.

Wing, the Alphabet-owned company that recently won regulatory approval from the FAA, is also active in Australia. In April, Wing announced that it has received approval from that country’s Civil Aviation Safety Authority after a successful pilot in Canberra, where its drones made about 3,000 deliveries over 18 months. Wing is an app-based service where users place orders for food items or small household goods via app and drones delivery them almost immediately. Soon, its service will be available to a small number of homes in Canberra, with plans for expansion close at hand.

If regulators approve — and they certainly seem to be moving in that direction — drone delivery seems poised for industry-wide adoption in the United States the next decade.

The technology is well on its way. Although product designers still have some kinks to work out, drones are already flying delivery missions, and doing so with significant success.

E-commerce customers have been consistent for years now. They want to purchase more items online, more and more of them in single-item purchases, and they want them delivered faster and faster. The standard of seven-day delivery has shrunk to two-day delivery. Same-day delivery is getting more and more popular. And customers all over the globe have shown themselves willing to pay for the convenience of courier services — especially, but not exclusively, for food deliveries.

Shipping carriers are struggling to keep up with these accelerating consumer demands. No matter how much they optimize trucking routes, they can only increase the efficiency of last-mile deliveries so much. And last-mile delivery is such a concern for carriers that they are pouring resources into developing robots that might be able to complete those deliveries without human operators. Drones seem like a straightforward addition to the ever-expanding last-mile portfolio.

The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.

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