In 2013 I saw an episode on 60 Minutes showcasing Amazon, Jeff Bezos, and Amazon’s new paradigm of home delivery by drone.
It was fascinating. A drone flew out of the Amazon Distribution Centre directly to a residential home dropped off a package on the ground, and took off while the home owner came out to pick up their package.
Now almost 10 years later we thought it timely to check on the state of the drone delivery market.
Some Acquired Personal Perspective
For many years I had thought it would be cool to have a drone. The proliferation of videos and shows containing aerial footage over travel destinations, landmarks, and various geographies inspired my interest in being able to have this vantage point for aspects of my own life.
I recently bought my first drone, for personal and recreational purposes only. Despite crashing my drone into a tree in the first week that I had it, playing with it proved to not only be fun, but it gave me some hands on context to the issues and challenges associated with commercial drone delivery.
For instance I did not need a large drone for my purpose so I picked one that weighed less than 250 grams. The significance of the 250 gram mark is that if you have a heavier drone then you are legally required to take formal training and get licensed in order to operate the drone. This was more of a commitment than I deemed necessary for my purpose.
In order to keep the drone under this 250 gram mark I also had to weigh any accessories I hoped to add to the drone to ensure I didn’t exceed this limit. Additionally my research indicated that some accessories (eg. propeller protectors, water floats) would add sufficient weight so as to actually impact the stability and operability of the drone.
When I first starting flying the drone I was focussed on keeping it within line of sight. Shortly I started sending it farther away so I could not see it at all, increasing my anxiety. In fact a couple of times the controller told me that either the battery was low, or wind conditions inhibited the ability of the drone to fly, or the controller had lost contact with the drone. Luckily in those cases it had an automated “go home” feature which quickly brought it back to where I was standing.
The drone I bought did not have obstacle avoidance. So shortly after I started using it I flew it around the neighbourhood with the camera looking down. I made the mistake of flying it at low altitude as well. So without the camera looking straight ahead I didn’t see the tree I was about to fly it in to. Ugh.
Weather conditions also affected the flying experience. Cold or windy weather seemed to significantly reduce the already limited battery life. Cloud cover can shift quickly impacting not only visibility and obstacle avoidance but signal integrity.
And I was also sensitive to the fact that I didn’t buy the drone to be invasive at all. I wasn’t going to be spying on anyone. I just wanted to see aerial views of places I lived and visited. Nothing more. But not everyone would know or understand my motivations, so I had to be aware of that when and where I was flying it around.
In all, my very limited personal experience got me to thinking about these issues, and others, that would be associated with professional commercial drone flight and package delivery.
What is the drone’s carrying capacity, including a package? How is this capacity affected by weather conditions? What happens if there is interference with the transmission signal? What if someone shoots it out of the sky?
Are there going to be hundreds of drones flying overhead delivering packages everywhere? How do they service multi-unit residences (eg. apartment buildings)?
My awareness and increased sensitivity was raised to the challenges of commercial drone delivery. Can these challenges be overcome allowing drone package delivery to go mainstream or are they insurmountable and make this just a novelty?
The State of Commercial Drone Delivery
According to statista.com, the commercial drone delivery market is going to continue to grow dramatically. In the U.S. alone this market is forecast to grow from less than $500 million in 2020 to over $9 billion by 2030. The largest end use markets are Retail goods delivery, Medical Aids delivery, Food delivery and Postal delivery.
Fortune Business Insights measures the global drone delivery market to be $989 million in 2020 growing to $31 billion by 2028, a compound annual growth rate of 54%.
Marketwatch.com says the global drone delivery market was $528 billion in 2020 and will grow to almost $11 billion by 2027, also at a compound annual growth rate of 54%.
While there are different views on the exact value of the market, the consensus seems to be that this market will grow at an incredible rate for the foreseeable future. What are the factors driving this increased demand?
Rapid delivery continues to be the major driver for drone delivery. Additionally the use of drones theoretically reduces carbon emissions over alternative delivery modes (ie. cars and trucks). Fulfilling the demand for this capability is also enabled by advancements in technology and regulatory definition and compliance.
In recognition of the huge market potential and commercial demand there are numerous market participants including, but not limited to:
- Amazon
- FedEx
- Boeing
- DHL
- Matternet
- Zipline
- UPS Flight Forward
- Drone Delivery Canada
- Workhorse Group
- Wing Aviation
- DJI
- Uber
- EHang
- Skycart
- Altitude Angel
- Flirtey
- Swoop Aero
- Boeing
- Airbus
Challenges to Growth and Adoption
Having given some thought about this market, with a view to my own (limited) experience, there seem to me to be several obstacles that could limit if not inhibit the projected market growth models.
Access
The basic drone delivery model seems to depend on the ability to delivery a package to a specific address and to the outside of that building. That is reasonable if there are single unit houses, one storey condominiums with separate entrances, or commercial buildings with one entrance.
But what about apartment buildings, multi-storey buildings, and commercial buildings with one entrance but multiple tenants?
Even for single unit dwellings access can also be inhibited by trees, bushes, landscaping, electric wires, telephone poles, fences and geography. Very, very few places have flat, unadorned entryways.
Distance
Drones have limited range in terms of both transmission signal and battery life. Given that the drones have to start, and end, their trip from a Distribution Centre of some kind, that means the range of delivery will be limited to addresses within a certain radius of that Distribution Centre.
Going beyond 25 kilometres, more or less, is going to be a limitation as to who can get packages delivered in this manner. It will be impractical for anyone, including Amazon, to build Distribution Centres every 25 kilometres.
Weather
Weather conditions can change quickly. Excessive winds, rain, snow, hail, ice, tornados and storms can all appear suddenly despite the best weather forecasts. Temperatures can drop below freezing very quickly.
All of these weather scenarios inhibit a drone’s ability to takeoff, fly and land. There are very few areas in the world that have ideal weather conditions each day and every day.
Battery life, flying and landing stability, range and signal integrity can all be impacted by less that ideal weather conditions.
Package Size
My personal drone (<250 grams) is not designed to carry any packages and its operability is impacted by even lightweight accessories. But larger commercial drones are designed to carry packages.
That being said these drones can typically carry packages weighing 5-10 pounds (2-5 kilograms). Larger drones can carry much larger packages.
As such current technology suggests that only relatively small or lightweight goods will be deliverable by drone.
Hunters and Thieves
It may be cool for most people to see a delivery drone flying overhead with a package. However for others these drones will be target practice. Just like skeet shooting I can imagine hunters, or anyone with a gun, may like to take pot shots at these drones.
With a limited altitude range, so as to avoid compromising air space, drones are within easy reach of the casual marksman alone a seasoned gun operator.
Even if drones are not just target practice, they could be the target of thieves. Just because the packages may be small and lightweight it does not mean they don’t contain expensive and highly valuable items. Shooting a drone out of the air to get the package, or just following it and taking the package when the drone lands, is a risk.
Airspace
Drones can not fly over or near airports. They can not fly at excessive altitudes, as defined by government regulations, such that they could cause air strikes.
These restrictions are necessary and non-negotiable. This means that addresses at or near protected airspace will not be able to receive delivery by drone.
Swarms and Drone Traffic Control
The phenomenal projected growth of the drone delivery market is exciting however that translates to there being a lot of drones in the sky all of the time. You can imagine that you would look up in the sky and seeing drones and packages flying all over the place in every direction.
It will not be enough for any one of the myriad drone operating companies to have a traffic control system for their own fleet of drones. There will need to be one industry standard drone traffic control system that ALL companies will use. Drones from any company will be criss-crossing the skies at all times so the drones and their obstacle avoidance technologies will need to “talk” to each other to avoid the otherwise inevitable collisions and crashes.
Regulations
The regulatory environment must continue to evolve to protect all stakeholders and constituents. These standards and legal requirements must be enforced and widely adopted, ideally internationally.
Consumer Reaction
For many people they will be excited to see drones flying in the sky delivering a package to their homes. They will be willing to pay for any extra delivery costs and appreciate the convenience and speed of delivery.
For many other people they will be annoyed by seeing these drones. Seeing and hearing them overhead, especially if there are lots of them, will be considered invasive and disruptive.
Consumer response may be the single most important challenge and obstacle that will determine the viability and rate of growth of the drone delivery market.
Roland Berger Overview
Another summary of the challenges facing this market is provided by Roland Berger:
Conclusion
Speaking from my own perspective the recreational drone experience is very exciting. It is fun and educational.
But the larger drone delivery market is what captured my attention when Jeff Bezos showed us that potential on 60 Minutes in 2013. Back then there were certainly obstacles to be overcome before this vision could become a reality.
Now, 10 years later, the market growth forecast shows enormous potential. But there remain a lot of challenges and limitations that must be addressed in some form in order to realize this potential.
The most important consideration is likely going to be public acceptance. While consumers of this capability may be happy for this delivery option, there may be enough public backlash to further inhibit widespread use and adoption.
Time will tell. Until then, keep your eyes in the sky. When ECommerce sites start offering a “Drone Delivery?” option, we’ll soon afterwards be seeing all manner of drones and packages flying overhead.