Think of the world’s most innovative technology locations and Iceland might not be the first place that comes to mind. But the island made headlines in August 2017 when it became home to the world’s first drone delivery service. Working with Israeli drone company Flytrex, the online retailer Aha is now able to deliver goods such as food, consumer electronics or flowers across the wide bay that divides the capital Reykjavik, cutting delivery times significantly. An Aha employee loads the drone at one hub, before another unloads it closer to its destination and completes the delivery – avoiding traffic on the ground.
We still have some way to go before seeing swarms of drones criss-crossing the sky to bring packages directly to customers’ doorsteps, but the progress made in Iceland and elsewhere suggest it might not be too far away. In October 2017, Chinese e-commerce giant Alibaba successfully completed a test flight to deliver boxes of fruit from the mainland to nearby Meizhou Island, while drone services have already begun to deliver parcels in remote parts of China and Switzerland, where ground transportation is difficult. In 2016, Amazon trialled drone delivery in the English city of Cambridge, bringing a TV streaming stick and bag of popcorn straight to a customer’s garden.
The potential benefits of using drones include faster and more reliable delivery, reduced shipping costs and a reduction in greenhouse gas emissions. A February 2018 study published in Nature Communications found that the use of electric drones for delivery of small commercial packages could reduce emissions over truck-based delivery.
Hurdles still to overcome
But before this becomes widespread reality, there remain numerous hurdles to overcome. “Technologically speaking, we’ve seen it’s already possible,” says Michal Michal Mazur, Partner at PwC in the Drone Powered Solutions team. “And while there are obviously still improvements to come here, the main complications come from regulatory and logistical perspectives.”
Airspace regulations for drone flight are still very restrictive in many countries, with strict limitations over where and how they can fly. The aerial vehicles can be flown in three main ways: by a pilot operating either in their ‘line of sight’ – so the drone is still visible to the naked eye – or remotely using on-board cameras. “The ultimate goal, though, is to have the drones fly themselves autonomously, which would maximise efficiency,” explains Mazur.
Drones can already make simple flights autonomously, but to operate large numbers of them, especially in cities, will require more advanced sense and avoid technologies, a host of new rule and new traffic management systems to prevent accidents. Because of their materials and low-altitude flight, most drones are undetectable to radar systems currently used to control airspace.
As The Economist says, “It is clear that the complexities of operating drones in large numbers have barely begun to be understood.” To speed up progress, government-led initiatives are being introduced around the world to facilitate greater cooperation with companies from different sectors, as well as across borders.
Beyond home deliveries
But progress will take time. It is for this reason that Hermes is currently adopting a ‘wait and see’ approach, as Roger Hillen-Pasedag, Head of Strategy Innovation and CR at Hermes Germany, explains: “We are following developments very closely, but don’t see any economic use cases in our business model right now. Drones offer advantages for fast, individual deliveries in remote areas, but almost 70% of our deliveries are made in urban areas. Delivery routes often include much more than 100 packages.”
According to Michal Mazur, logistics companies may find more immediate benefits from drone technology beyond home deliveries. “They could be used in the supply chain to aid the fulfilment process and increase efficiency. So, drones might be used for deliveries between depots or even inside warehouses to move large and small packages around.”
While parcel and last-mile deliveries currently pose significant challenges, easier-to-regulate, point-to-point deliveries on a B2B basis are already becoming more common. In Rwanda, for example, tech start-up Zipline has begun transporting blood and medical supplies, and drones are now carrying out deliveries of lab samples between hospitals in Lugano, Switzerland. Oil company Shell and shipping firm Maersk have been using drones to carry spare parts to oil rigs or vessels at sea.
In addition to the regulatory and logistical aspects still to be clarified, Mazur points out the importance of public acceptance. “There are many aspects to consider, from noise to safety and privacy – drones are all fitted with cameras, after all. I think it will be another five to ten years before these issues are resolved and we start to see drone deliveries on a larger scale in metropolitan areas.”