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While the drone industry is far from maturity, the good news is that the freight and logistics sector, due to its unique symbiosis with drone technology, is in a privileged position at the forefront of the integration of unmanned aerial systems (UAS), helping to determine what shape the industry will take when it comes of age. A focus on the nexus between law, logistics and economics highlights the short-term hurdles that can be overcome, and long-term opportunities that can only be realized, with strategic planning and expert industry knowledge.
Commercial prospects: the benefits and drawbacks of drone logistics
Relief from last-mile costs
Last-mile logistics connects regional distribution centers, or “transportation hubs,” to the final destination. It caters for the movement of individual packages to specific locations and necessitates significant flexibility and a large fleet size to fulfill this task. It is therefore no surprise that the last mile accounts for 53 percent of the total costs of shipping globally. Of that, a considerable chunk can be attributed to the labor costs in developed markets as a result of last-mile logistics. This is only exacerbated in rural areas where the sparse population increases inefficiencies and loss in productivity while consumers maintain the same demands and expectations as those in urban areas.
A study in 2016 carried out a cost analysis of Amazon Prime’s drone delivery scheme, with predictions that, compared to a U.S. postage company delivery van in a mid-sized U.S. city, drone delivery could slash costs by one-third on the busiest days of the year, with the emphasis placed on labor cost savings. However, considerable technological hurdles have yet to be overcome before autonomous drone flights using “detect-and-avoid” software are possible, and until then we would merely be replacing delivery drivers with remote pilots. As a result of the lack of safe and developed technology, the typical regulatory position places further, complex limits on the beyond visual line of sight (BVLoS) operation of drones, hindering the range of these delivery systems almost to a point of uselessness. Until technological progress can stimulate regulatory confidence in autonomous drones, the fantasy of a dramatic reduction in labor costs will remain just that – a fantasy.
It is clear that commercial drones have the potential to carve out a new model of profitability by slashing costs, with some studies estimating a five to 10 year horizon for this technology to become viable. However, one must be cautious not to place too much emphasis on these so far fantastical promises without considering the technological and legal hurdles yet to be navigated. On the flipside, neglecting a long-term strategy could leave companies in the dust of their competitors and prove fatal.
- Drone technology offers unique long-term logistical benefits when properly integrated
- Opportunities for cost savings and greater efficiency, but less environmental impact are unmatched by other disruptive innovations
- The regulatory and technological hurdles, however, can only be overcome with progressive strategies and expert industry knowledge