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Drone era in shipping

The Beginning of the drone era in shipping: Should your business be worried?

It has been a while since Jeff Bezos of Amazon signalled that drone deliveries could be the future. While it does sound like a scene lifted from a sci-fi movie, it’s not. Drone deliveries are being tested all around the world. The US is not happy with commercial drones flying over populated areas though. Venture capitalists are investing in drone delivery start-ups and Walmart has asked for permissions to test drone deliveries.

The idea does sound promising. Unmanned quadcopters deliver packages to doorsteps, eliminating wait times and human intervention. But as of now, the idea is in infancy because the economics are not right. It is pretty expensive to use drone deliveries unless it is a pressing emergency. The economics of last mile delivery has two major factors to be considered: Route Density, that is, the number of drop-offs in a delivery route and the drop size or the number of parcels per stop. Many deliveries in a short period of time or distance will result in low costs. Or, if the drop off includes many parcels in the same location, cost per parcel is going to be low.

So, if your business makes the cut with the above-mentioned factors, then it makes sense to invest in drone delivery futures. For all that you know, you might be delivering your packages via drones in the foreseeable future. But, there is much left to be desired on the economic aspects of last mile delivery. Unless there is a cost optimization technology in place, drone delivery is not a feasible option. Also, they have to fly back to home base to recharge batteries and pick up the next service.

Compare that to the current status quo: delivery trucks. A delivery truck from UPS makes an average of 120 stops a day to deliver hundreds or thousands of packages. Don’t they seem to be better than drones? But you have to remember that these drones are only for last mile delivery. Amazon Prime has its drone project and Google has Project Wing, testing waters with this.

If your business delivers apparel like shoes and shirts and if the delivery distance is just a few miles from the warehouse, a drone delivery seems plausible in the future. Amazon states that 86% of its packages weigh less than 5 pounds. And Walmart has noted that 70% of Americans live within 5 miles of a Walmart. So, these are great avenues for drone delivery. But Amazon lacks fulfillment centers within the delivery range.

So, be cautiously optimistic about the prospect of drone deliveries. It could be the next big thing, in logistics. It could just be a big company – high emergency option.

Related:

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Bianca

Marketer, Supply Chain Expert, Coffee addict.

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