Drone delivery revisited: what are the barriers to adoption?

Towards the end of 2015, I asked: “What does it mean when companies announce they are ‘testing drone delivery’?”. In today’s post, I look at what has changed since then, and which obstacles still stand in the way of drone delivery.

Firstly, the good news.

National regulators have adopted more definitive legal stances regarding drone technology, and some, such as the UK’s Civil Aviation Authority (CAA), have adapted such rules with the explicit intention of allowing companies to experiment.

This has allowed the companies engaging with drone technology to more accurately test their operation against commercially applicable conditions, which was highlighted in December by both Amazon and DPD.

In addition, Australian start-up company Flirtey has demonstrated the viability of autonomous delivery as part of a partnership with 7-Eleven. This illustrates that (expensive) human pilots, though almost certainly required as a back-up option, are not necessary for the successful execution of deliveries, thus reducing costs.

Nonetheless, it is important to note that the core limitations regarding drone-based delivery systems have not changed significantly. These are:

  • Physical and virtual attacks represent a threat
  • There are restrictions on the size of commercial drones, and therefore their payload
  • Drone systems have a short range.

Of these assumptions, the latter is the most taxing.

Lithium-ion batteries are the most effective batteries available to power drone systems, as a result of their life, but also their manufacturing economics, which is crucial. However, they have several issues, as documented by the problems Samsung experienced with its Note 7 phone. In sum, the list of problems includes leakage, poor chemical stability, flammability and limited operating voltage.

Of the delivery drones currently being trialled by Amazon, DPD (produced by Atechsys), Flirtey and Matternet (all of which are powered by Lithium-ion batteries), none have a top range of more than 20 miles. The maximum payload amongst them is around 3kg, though this is less of an issue (86% of Amazon’s packages weigh less than 2.27kg). By contrast, China’s JD.com has started trialling deliveries to rural areas using a much bigger drone, with a payload capacity of 15kg and delivery range of up to 31 miles, however this drone uses a petrol engine.

Though it is clear that the most commercially applicable deployment for drone technology is in areas with relatively low population density, the limits of power supply curtails its deployment. At present, the most obvious way around this is to install a network of drone stations for the secure fuelling and housing of delivery drones, a solution which has been explored by DPD.

Whilst this situation prevails, the most practical solution may be a concept unveiled by Mercedes-Benz in September 2016. In partnership with California start-up Matternet, whose drones are currently being tested by Swiss Post, among others, the automotive manufacturer has unveiled a ‘Vision Van’ which acts as a mobile launch unit for a pair of drones. Though carrying capacity is a concern, this solution may be viable, particularly if existing vans can be retro-fitted to accommodate drones.

In a moonshot effort to take the mobile delivery hub concept to its logical conclusion, December saw Amazon file a patent for an airborne fulfilment centre, essentially an airship with an underslung product compartment, which would dispatch drones from above. Amazon is notorious for experimenting with unusual ideas, so this should not be viewed as a definitive plan. Nonetheless, the company’s efforts underscore much of the buzz still surrounding drone technology; seemingly, anything is possible!

If this brief has been of interest, you might also like to download Ti’s analysis and market overview of the global e-commerce logistics industry. The report contains Ti’s bespoke market size and forecasting data, as well as overviews of some of the world’s leading e-commerce businesses, such as Alibaba and Amazon. In addition, the report includes company profiles of both post offices, LSPs and dedicated e-commerce solution providers to showcase the different strategies shaping the market we know today.

Source: Transport Intelligence, January 24th , 2017

Author: Alex Le Roy