The high­ly-respect­ed research com­pa­ny, McK­in­sey, asked four of its top air mobil­i­ty ana­lysts, led by Robin Riedel, Head of the Dis­rup­tive Aero­space sec­tor, to analyse the future of drone deliv­ery and its impor­tance for last mile deliv­ery. The results are both fas­ci­nat­ing and encour­ag­ing.

By ear­ly 2022, there were already 2,000 glob­al com­mer­cial drone deliv­er­ies occur­ring each day with the num­ber grow­ing by the month. The report states, “As the tech­nol­o­gy matures, reg­u­la­tion evolves, and busi­ness mod­els emerge, drones could become as cost-effec­tive for pack­age deliv­ery as tra­di­tion­al trans­port modes.”

It con­tin­ues, “Drone tech­nol­o­gy has the poten­tial to meet a range of last-mile con­sumer use cas­es, such as pre­pared food, con­ve­nience prod­ucts, and oth­er small pack­ages, as well as B2B needs, such as mov­ing med­ical sam­ples to labs.”

While tak­ing the usu­al envi­ron­men­tal-friend­ly tack, the report points out, “Com­pa­nies will be much more like­ly to reach their emis­sions goals if they do not have to deliv­er a one-pound bur­ri­to with a two-ton vehi­cle.”

(cred­it: McK­in­sey)

McK­in­sey focus­es on labour costs incurred.

Until BVLOS is allowed by air reg­u­la­tors and becomes nor­mal prac­tice, the present busi­ness is not eco­nom­i­cal­ly viable due to the need of a visu­al observ­er and the short flight dis­tances this cre­ates. The researchers say, “As a result, labour rep­re­sents up to 95 per­cent of the total cost of drone deliv­ery. Our bot­tom-up mod­el esti­mates that a sin­gle-pack­age deliv­ery has a direct oper­at­ing cost of around USD13.50. These costs are not yet com­pet­i­tive with elec­tric cars and vans, or any type of vehi­cle doing mul­ti­ple deliv­er­ies in a sin­gle run.”

Once BVLOS becomes a wide­spread real­i­ty, then labour costs can shift “from observ­ing air­space to oper­at­ing drones, where the num­ber of craft per oper­a­tor will need to increase sig­nif­i­cant­ly. These advances would include autonomous drone flight in which craft fly with lim­it­ed human inter­ven­tion, unmanned traf­fic man­age­ment sys­tems and sense-and-avoid solu­tions.”

It goes on, “Once these inno­va­tions are in place, reg­u­la­tions will need to evolve, enabling larg­er num­bers of drones per oper­a­tor. As those shifts begin to hap­pen, the poten­tial cost advan­tage will grow.”

The McK­in­sey analy­sis sug­gests that if drone oper­a­tors can man­age up to 20 craft simul­ta­ne­ous­ly, this may mean a sin­gle pack­age deliv­ery will cost no-more than USD1.50 to USD2. At present, oth­er forms of trans­port deliv­ery pro­vid­ed via cur­rent food deliv­ery apps and ser­vices cost more, although these fees may also cov­er addi­tion­al expens­es, such as man­ag­ing the order­ing plat­form and coor­di­nat­ing deliv­ery dri­vers, “which can make direct com­par­isons dif­fi­cult.”

The com­pa­ny states, “With Uber Eats, Wolt, Food­pan­da, and Grub­hub, for exam­ple, fees to cus­tomers can range from USD0.49 to USD7.99 and costs for restau­rants can be any­where from 10 per­cent to 30 per­cent of the order, along­side the usu­al cus­tomer gra­tu­ity.”

The researchers then say those busi­ness­es using drone deliv­ery “would do well to build a clear strat­e­gy for their use… bal­anc­ing the dif­fi­cul­ties of drone oper­a­tions with the poten­tial ben­e­fits.”

Will Ama­zon Prime Air Help Rev­o­lu­tonise Drone Deliv­ery?

The report offers six ques­tions to pon­der:-

1. What prod­ucts can fea­si­bly be deliv­ered by drone and how recep­tive will cus­tomers be to this option?

2. What regions will have the great­est demand for drone deliv­ery?

3. Can exist­ing stores and ware­hous­es be mod­i­fied to accom­mo­date drone deliv­er­ies, and will addi­tion­al infra­struc­ture or facil­i­ties be required?

4. How well can drone oper­a­tions be inte­grat­ed into broad­er deliv­ery oper­a­tions using oth­er modes?

5. Are there any nat­ur­al part­ners for drone deliv­ery oper­a­tions?

6. How can drones help con­tribute to the company’s sus­tain­abil­i­ty goals?

McK­in­sey points out, “Devel­op­ing drone deliv­ery capa­bil­i­ties will not be sim­ple, espe­cial­ly at a small­er scale. How­ev­er, as com­pa­nies reach full drone deliv­ery capa­bil­i­ties, they will begin to see expand­ed ben­e­fits in their trans­port strate­gies.”

The report con­cludes, “Eco­nom­ic and envi­ron­men­tal advan­tages sug­gest that drone deliv­ery could become an impor­tant part of the deliv­ery ecosys­tem. For­ward-think­ing com­pa­nies will plan today for a drone-enabled future. As they do so, they should pre­pare to evolve their drone strat­e­gy over time, in line with reg­u­la­to­ry changes, tech­no­log­i­cal advance­ments, shifts in cus­tomer pref­er­ence, and their own capa­bil­i­ties.”

For more infor­ma­tion

(Top image: Crock­ett)