For package delivery, the “last mile” has always been the most complicated and expensive to complete. Now with companies large and small pursuing drone deliveries, the last few feet of the parcel delivery will become the sticking point. A recent FAA decision brings the possibility closer to reality, but don’t expect a fleet of package-bearing drones to ever darken the sky.
The delivery idea is attractive as drones become more common. They give great overhead shots of outdoor events. Documentaries have a new flair that wasn’t possible when using a helicopter and pilot. Businesses, from railroads to food growers to insurance companies, employ drones for inspections without risking workers climbing on damaged buildings or dangling from a rail bridge. The military, scientists and first responders use drones in all kinds of situations. People fly them as a hobby all over the place — a park, beach, in the woods — sometimes invading others privacy.
For package delivery, the hurdles are both technical and strategic. The safe handoff from a flying machine the size of a push lawnmower with rotors whirling at high speed is an obvious one. Another is weather. And drone delivery of a single package defies any economy of scale.
Still, package delivery by drone has received much hype, but this use always stretched the technology and requires new regulations. To unleash the delivery potential, the Federal Aviation Administration would have to allow drones to fly beyond the line of sight of an operator with the faith that the technology would keep them from crashing into something or someone.
The FAA took a big step toward this reality last week when it granted so-called type certification to a delivery drone built by Matternet, a startup in Mountain View, California. This certification marks the first nonmilitary drone that the cautious FAA has deemed safe to fly over people and will be able to fly everywhere regulations allow the aircraft. This process took four years, so the technology is being rolled out methodically as drone operators prove themselves.
The FAA currently gives exemptions to companies for long-distance flights on specific routes without an eyes-on monitor. Wing Aviation LLC, Amazon.com Inc. and a United Parcel Service Inc. unit have delivered packages by drone under this certification. The agency plans to replace its current practice with general rules for flying beyond visual line of sight, and when that happens, drones like those made by Matternet will be unleashed. This will allow long-distance flights for inspecting pipelines or railroad tracks or delivering packages.
Matternet is one of the more advanced drone delivery companies and underscores how the technology can work in a niche setting. It has been shuttling health-care items for years between hospitals that are 3 miles apart in Zurich. The startup is setting up a citywide medical drone network in Abu Dhabi. In the US, the company has worked with UPS to make deliveries of laboratory-type items on hospital campuses in the US and parcels from a CVS Health Corp. pharmacy to a Florida retirement community.
Health care is a unique market because there’s urgency for some deliveries, which command a price premium for speed. Deliveries of lab results can fetch $20 to $40 for each item even over short distances. These deliveries usually follow specific routes, say between laboratories at two separate hospitals. For these deliveries, Matternet has designed a large pod that the drone can land on without getting near people. The packages are left and picked up at the pods, and the drone can even autonomously swap out a spent battery for a charged one.
This won’t be the case for e-commerce. People have become accustomed to finding their packages close to their doorsteps or building entrances. This creates a “last meter” problem because of the difficulty for drones to safely drop off packages without nipping the ears of the family dog or getting tangled in holiday yard decorations. The FAA isn’t keen on these vehicles taking off and landing by themselves near people.
Companies pursuing drone deliveries, including Amazon and Walmart Inc., are trying different solutions to drop packages at homes. Parachutes and winches are a couple of the common methods, as is dropping from low altitudes. All of them have complications.
The biggest hurdle is that drones will be making point-to-point deliveries, which is the quickest but most inefficient way to take packages to homes or businesses. The drone will travel out and back from a warehouse to deliver one item. This may create a premium market for emergency deliveries, but it would take a small army of drones to service the 150 to 200 packages that just one truck normally takes on a route.
It’s true that a large majority of packages weigh 5 pounds or less and that the drones being tested can handle that weight. Still, it would take two drones to deliver two items to a household that together weighed more than the drone’s payload limit. For a delivery truck that second package increases efficiency exponentially. That efficiency equation applies to dropping off a package at one house and then another across the street.
In logistics, this is called density, and it’s the holy grail for increasing profits. Drones, because they only make point-to-point deliveries, have no density. In fact, an Amazon drone shipment may take away a package that would have provided a nearby delivery for a route serviced by an Amazon truck.
While drone technology has improved and the aircraft can detect and avoid objects in the air, they can’t fly in heavy wind or rain nor icy conditions. UPS doesn’t stop delivering when the weather is bad. That’s why UPS Chief Executive Officer Carol Tome said in January, “There are lots of issues with drones.”
Then there is the reaction from consumers. Do they truly want drones buzzing around their neighborhoods? How often do they need to receive an air-dropped item 30 minutes after placing an order?
There is a place in the logistics world for delivery by drone. Despite the hype in the e-commerce market, it’s unlikely the sky will be studded with packages coming in for a landing on doorsteps.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Thomas Black is a Bloomberg Opinion columnist covering logistics and manufacturing. Previously, he covered U.S. industrial and transportation companies and Mexico’s industry, economy and government.
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