Analyst Q&A: TI Part 2 - The Use of Drones in Logistics

Analyst Q&A: TI Part 2 - The Use of Drones in Logistics

In the second part of our Q&A with Transport Intelligence, we continue our discussion of the latest developments in the logistics market by looking at the potential impact of unmanned aerial vehicles (UAVs).

Current usage in the logistics industry is in its infancy. However, over the next decade, analysts have forecast the rapidly evolving drone technology to transform the conventional way of doing business in various sectors. For example, Amazon’s Prime Air is a future service that will deliver packages of up to five pounds in 30 minutes or less using small drones

If you missed Part 1 - Lilith Nagorski and Alexander Le Roy helped us break down how technology is transforming the global logistics market, and looked at the impact e-commerce is having on traditional services.

Q4. How will UAVs affect the logistics market? Do you predict any challenges logistics companies may encounter when using UAVs for deliveries, and what are the solutions? (Answered by Alexander Le Roy)

UAVs will increasingly penetrate the logistics industry, though at least initially, their deployment will be restricted to niche areas. There are good cases for the application of drones in the delivery space where infrastructure is deficient, or where geographic problems are insurmountable. A good example of this is Swiss Post’s collaboration with UAV manufacturer Matternet, which could have a significant impact for the delivery of small payloads in mountainous areas. Similarly, UAVs are highly applicable to the provision of medical supplies and aid in disaster zones.

The use of UAVs in a widespread manner is, however, precluded as a result of several constraints inherent in the technology behind them. Firstly, UAVs are necessarily restricted in their size in order to meet regulatory requirements; this means that the size of their payload is quite small. Larger drones do exist, and it has been calculated that the majority of e-commerce consignments could be accommodated by a small UAV. Nonetheless, a larger aircraft is far more unwieldy than a smaller one, and presents a much greater hazard to the public.

Secondly, UAVs suffer from a relatively low range as a result of the limitations of existing battery technology. This will inevitably improve, but until a significant leap is made, this acts as a restriction on their usage. The obvious solution is the development of networks of refuelling ‘ports’, which could be considered analogous to Tesla’s development of a concentrated charging network for its vehicles, counteracting ‘range anxiety’. This would, however, necessitate a significant financial investment.

Additional issues are presented by targeted threats against the craft themselves, whether physical or digital. These threats include the potential for hacking, as well as disabling or shooting the UAVs down in order to retrieve their cargo or valuable data. As such, the commercial application of UAV technology has been subjected to uncompromising regulatory efforts. The digital threat is perhaps the most significant, and does not have an immediately clear solution, though it is worth pointing out that this is a growing problem within traditional means of transport, such as automobiles. Thus it would be unfair to single out UAVs on this issue.

Q.5 Outside of those you already cover, what other industries do you find interesting? Have you ever considered covering this industry? (Answered by Lilith Nagorski)

We get asked a lot about the networks and warehousing that supports supply chains so we’re particularly interested in sharing our research and analysis into these strategies for LSPs, retailers and manufacturers.

In early September 2016, Ti will be publishing the first edition of its Global Warehousing and Logistics Networks report. Included within this report is analysis of the economic drivers that have shaped logistics networks, as well as an exploration of the evolving architecture of world trade. Ti also provides overviews and insight into the role of warehousing in the typical supply chain of a number of vertical sectors, including automotive, high-tech, cold chain, e-commerce and CPG.

Throughout the report, Ti uses real case studies to highlight differing warehousing strategies, as well as analysing the technological advancements, including robotic and the ‘Internet of Things’, that are changing and enabling the warehouse operations. In addition, within the report Ti has included a chapter exploring the ethics and sustainability of modern logistics warehousing strategies.

Conclusion

Are drone deliveries the future of the logistics market? They certainly offer a number of benefits - potentially eliminating both wait times and cost of labour. Industry leaders like Amazon and DHL are already experimenting with the emerging technology.  

However, while consumer enthusiasm is undoubtedly strong, the technology must overcome several hurdles (privacy, government regulations, etc) before our skies become a highway for drones.

We'd like to thank Lilith and Alexander for taking the time to answer our questions and sharing their extensive knowledge of the global logistics market with us.

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A short bio about the interviewees:

Lilith Nagorski, Head of Research: Lilith joined Ti as a Researcher working primarily on the providers’ area of the GSCi portal and quickly brought improvements to the organisation of the department. As such, Lilith took on the responsibility for managing Ti Reports and now she manages the full team of researchers and analysts. Lilith’s focus is on quality and her goal is to ensure that Ti research products continue to lead the market.

Alexander Le Roy, Analyst: As a graduate in International Relations, Alex brings a variety of knowledge and interest to his role as an Analyst at Ti. Alex’s drive to constantly provide quality analysis for the logistics industry has led him to increase his area of responsibilities to include investigating the potential for new products, training new recruits, and scanning the horizon for the next big thing.

Published by Research and Markets

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