Unmanned aircraft systems, commonly known as drones, are becoming increasingly popular in modern logistics operations. Delivery drones transport medicines, parcels, groceries, food, and other homecare products. These drone delivery operations are gaining widespread importance in last-mile delivery given their accuracy, environment-friendly operations, shorter delivery time, and lower operational cost than traditional delivery channels. [i]As per analysts, the operating costs for a drone delivery service are 40% to 70% lower than a vehicle delivery service model. Additionally, the COVID-19 pandemic has further accelerated the requirement to look for alternative, safe, and contactless delivery models. This has led to an  upsurge in the global demand for drone delivery services.

Drone industry overview

Drones were initially introduced as military/police equipment and were used primarily for surveillance and monitoring against any targeted attacks. The application and usage of this technology have since evolved to include various other labor-intensive and complex tasks across industries. These include identifying defects in oil/gas pipelines, checking the health of crops, identifying hotspots in fire situations, surveillance for mining and construction activities, cinematography, delivering packages, etc.

Adoption of drones in the retail and logistics industries

The retail and logistics industries invest in and leverage drone technology to implement alternative and scalable delivery models. Major industry players like Amazon, UPS, DHL, Walmart etc., have already introduced drone delivery services on their platforms. The industry is also supported by specialist drone delivery operators and technology providers like Wing, Zipline, and Matternet. The size of the global drone package delivery market is estimated to reach USD 8 B by 2027^[ii], at a significant CAGR of 41.8%.

“Gartner predicts that in 2026, more than one million drones will be carrying out retail deliveries, up from 20,000 today.^[iii]”

Countries leading the adoption of drone delivery are:

1. Asia - China and Japan for parcels and shipment.
2. Africa - Remote areas in Rwanda and Ghana for medical supplies and test samples.
3. Oceania - Australia and Vanuatu for food, personal, and home care products.
4. Europe - Finland, Iceland and Switzerland for food, medicines, and other retail products.
5. America - Multiple states in the US and Canada for various packages.

Drone delivery operations

The drone delivery ecosystem includes multiple stakeholders such as

1. National Aviation Authority (primary stakeholder for any aircraft traffic management operation)
2. International Civil Aviation Organization
3. Drone owning company/ drone service provider
4. Drone pilots (the remote pilots who will be flying the drones)
5. Ground support team (manages drone launch pads and the loading and unloading of packages)
6. UAS registration system (includes capabilities of registration, and including operator and pilot information)
7. UAS traffic management system (UAS and  operator identification, UAS traffic flow management, airspace management, flight operation management, metrological, spatial and obstacle info management, etc.)
8. Drone manufacturers (companies that build the UAV/drones)
9. Technology providers (provide various offerings like mission planning and altitude authorization, drone flight planning, real-time drone flight telemetry, and automated flight log tracking, instant airspace authorization, drone identification, and tracking, etc.)

Figure 1 provides a bird’s eye view of drone delivery operations.

Figure 1: Drone delivery operations

Challenges for drone delivery providers

Legislative and regulatory issues: To keep a check on issues like altitude (drones cannot fly higher than 400 ft.), span of operation, the weight of the drone, privacy laws, navigable airspace.

Talent availability for scaled operations: There is limited availability of skilled and experienced resources in the drone delivery space.

Infrastructure: The initial implementation and set-up costs are high for drones. Setting up of drone launch pads, aligning the movement of drones with buildings and open operational spaces, licenses, battery charging facilities, software and technology, training facility, and research and development require high investments.

Public acceptance: Many consumers are still not ready to accept drone deliveries due to privacy, safety, and security concerns.

Weather impact: Efficient drone delivery operations are dependent on weather conditions like rain, wind, snow, etc.

Drone abuse: There are chances of theft of packages and potential damage to the drone equipment.

Support services required for drone delivery

Retail and logistics companies partner with specialist drone technology and service providers for their global operations and expansion plans. The experience and expertise of such providers support seamless delivery in a managed services model (See Figure 2). Providers support multiple areas of operations, such as:

1. Provide support in drone technological capabilities such as navigation management, detect & avoid (collision management system), integrated air traffic management system, etc. This enables cutting-edge technologies like artificial intelligence, machine learning, digital twins, etc.
2. End-to-end hiring and training of drone pilots and ground support operators with the required skills.
3. Marketing campaigns, research, and analytics.
4. Geospatial mapping and curation.
5. Supply chain management operations, such as order management, contract management, track and trace, customer service.
6. Data analytics and intelligent operations. 

Figure 2: Services in drone delivery 

Advantages of drone delivery services

The significant benefits of drone delivery services include:

1. Faster air deliveries using shorter and direct routes, saves time for companies.
2. Low operational charges, when compared to vehicle delivery services, reduce costs.
3. Technological advancements like VTOL (Vertical Take-off and Landing), geospatial mapping, IoT, and machine learning result in higher accuracy in package delivery.
4. It is easier to reach remote areas and harsh terrains like jungles, hills, or mountains.
5. Provide the convenience of contactless delivery with limited human intervention.
6. Reduces carbon footprint due to a decrease in energy consumption. 

The future of drones

The use of drone technology and drones for delivery is inevitable. Soon, multiple industries will leverage drone technology to bring innovation to their business areas, including surveillance, research, last-mile delivery, etc. E-commerce giants have been at the helm of research, development, and filing patents in drone technology since 2005. They continue to be invested in this space and are focused on bringing down the cost of operations in last-mile delivery, improving delivery time, and integrating drone technology with mobile phone applications to provide better user experiences. Drone delivery services will only grow in the coming years, and companies will need to stay invested in drone delivery programs and technology enhancements before realizing operational growth and cost benefits.

If you are interested in learning how Wipro is helping our clients leverage the potential of drone delivery, connect with us.

References

1. https://www.gartner.com/smarterwithgartner/why-flying-drones-could-disrupt-mobility-and-transportation-beyond-covid-19 and https://www.toptal.com/finance/market-research-analysts/drone-market
2. https://www.wboc.com/story/44179990/global-drone-package-delivery-market-2020-ndash-production-revenue-average-product-price-and-industry-analysis-to-2027
3. https://www.gartner.com/smarterwithgartner/why-flying-drones-could-disrupt-mobility-and-transportation-beyond-covid-19/

Thomas Vazhavelil
BPaaS solutions for consumer unit and Presales lead for Hi-tech - Wipro iCORE-Digital Operations and Platforms.

Thomas has nearly 20 years of overall experience in Business Process Management, process re-engineering, and system implementation. He has keen interest in new products/solutions and building new technology alliances to enable business opportunities.

Arundhoti Sonowal
Presales Consultant for Consumer Business Unit - Wipro’s iCORE-Digital Operations and Platforms.

She has over two years of experience as a solution specialist in managing new-age solutions and technology alliances. She is a chemical engineer with an MBA in Marketing & Strategy from IIM Kozhikode, India.