Drone: Shifting the Paradigm for On-Demand Logistics

by LJM Group

Customers want their goods as fast as possible, and shippers want to survive in the breakneck game of intense customer demand and soaring shipping costs. Shippers have been scouring the latest technologies for possible alternative solutions, and drone deliveries have been emerging as a promised fix for years.

Widespread drone delivery could mean reduced labor and fuel costs, blazing-fast delivery times (think less than 30 minutes in certain scenarios) and, of course, happier customers. Drones are still far from hitting the mainstream, with many technical and regulatory obstacles still to be overcome — but it’s something that the major players are actively testing.

Regulatory Hurdles

The farther a drone can fly with a parcel, the greater the cost savings. But drones aren’t allowed to cross state or national lines under current FAA regulations. Moreover, many fulfillment centers are in urban areas within controlled airspace, creating an impractical authorization process. Drone usage is also regulated on the state and municipal levels, so carriers have a long way to go before these various regulatory issues are ironed out. Still, NASA predicts that we’ll be seeing up to 7 million drones in the sky by 2020, with almost half of those performing commercial tasks. NASA has involved itself in air traffic control for drones, which is setting many useful precedents for businesses and cities alike.

The Final Mile & Drones for Hire

While long-distance drone delivery may be out of reach for some time, short-term drone courier services are already at hand. The “last mile” is the most expensive leg of a typical shipment. The ability to automate this final segment of a parcel’s journey could be a game-changer for both sides, potentially saving billions. This is one way drones might help — by acting as relays from distribution centers to either collection points or all the way to customers’ doorsteps.

In the same way Amazon is already outsourcing some of its last-mile deliveries to gig-economy truck operators, LTL carriers can use freelance drone operators to dispatch packages from central containers in a target area or distribution center.

A Cost-Efficient Way to Serve Rural & Inaccessible Areas

Many areas have already seen incredible results with pilot programs using drones to get medical supplies to rural areas, and it’s only a matter of time before this model starts seeing regular adoption in the commercial space.

The Waiting Game

Drones bring several obvious advantages: quicker delivery, lower material and operational costs, reduced environmental impact, and greater reach than on-the-ground technologies. By offering instant gratification, drones could very well change behavior in ways that benefit brands, such as causing a surge in impulse buying.

But every technology also brings disadvantages. Current-generation drones are loud; if they became common in urban spaces, the effect might be like a swarm of locusts overhead. Like other disruptive technologies such as driverless vehicles, drones also bring a cascade of new liability, security and insurance-related exposures. Consumer rights issues may crop up over issues such as stolen drones or damaged packages. Drones may actually make things worse for brick-and-mortar stores, intensifying the battle to get customers into the store instead of ordering online.

Only time will tell how drone delivery will change the global shipping industry. In the meantime, shippers and retailers are watching and waiting to see how the industry and the culture will respond and adapt to these new possibilities.

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