Inbound Logistics | January 2024


Software Services

The global delivery drones market size was valued at $530.2 million in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 42.6% from 2023 to 2030.

$65.1M $99.8M


THE SKY’S THE LIMIT A big selling point for last-mile drone delivery is convenience. It’s the ability to get Tylenol to a sick child in the middle of the night within 30 minutes or a forgotten ingredient while cooking dinner. “We call it the ‘autonomy economy’ and it will change everything,” says Flippo. “It’s not that it’s cheaper per delivery. It’s that you can do incredibly convenient things.” A Drone Express app is already available that allows people to shop locally with unlimited delivery for $9.49 a month. Early fall 2023 was a busy and productive time in the American drone marketplace. Four drone companies achieved the coveted FAA authorization to y beyond the visual line of sight (BVLOS). Two of the companies—Zipline and UPS Flight Forward—intend to use their BVLOS approvals to conduct drone package deliveries. Zipline is authorized to operate its Sparrow drone, while UPS Flight Forward is authorized to operate Matternet 2. These approvals are a huge step forward for the drone delivery industry, which has been building momentum ever since Jeff Bezos rst spun his seemingly fantastical tale regarding the future of Amazon deliveries a decade ago. It turns out he wasn’t spouting science ction, as 95% of Amazon deliveries

weigh less than ve pounds and drone delivery is within the realm of possibility. The company’s Amazon Prime Air service will deliver to customers in three U.S. locations as well as cities in Italy and the UK by the end of 2024. In terms of last-mile drone delivery, even the ve-pound weight limit is surmountable. “If you place a huge order with Kroger, it’ll show up via ve drones because it doesn’t cost us anything to send them all to your house,” says Flippo. Their service also helps customers eliminate the need for order substitutions. “If you order one avor of ice cream and it’s not in stock, a drone from a different store will bring it to you,” she adds. A DEMAND FOR EXPERTISE Drone implementation will also create jobs. Just as manned aviation requires air trafc controllers, so does autonomous aviation. Robotics-related expertise will be in demand, as will software developers working on drone systems. A whole new industry aimed at developing and advancing drones is springing up. The sky is indeed the limit. “Right now, the regulatory landscape is the biggest hurdle facing mass adoption of drone delivery,” O’Sullivan says. “The innovative technology provides a reliable, eco-friendly, and cost-efcient delivery model.” n

The Chaparral aircraft is designed to carry 300 to 500 pounds of cargo and has a range of up to 300 miles. These kinds of statistics are game changers in the middle-mile arena. Volansi’s deliveries focus on commercial and defense industries including construction, mining, oil and gas, medical, and heavy equipment operations. Meanwhile, Elroy Air is working with FedEx Express to test a concept for middle-mile logistics and has also signed several agreements with prospective customers interested in using its Chaparral aircraft for commercial, military, and humanitarian operations. The bottom line is last-mile delivery drones have smaller payload capacities and shorter ranges than drones being developed for middle-mile logistics. The ability to carry more cargo for longer distances increases middle-mile drone cost benets over traditional transportation in this area. Among other advantages, middle-mile drones like Elroy’s slash transportation hours and handoff times tied to trucks and other grounded vehicles. And, they actively shift the economic value of time savings to both the sender and receiver, according to a 2020 white paper from Levitate Capital, a venture rm focused on next-generation air mobility. ( Note: Levitate Capital is an Elroy Air investor. )

January 2024 • Inbound Logistics 179

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