In the first blog in the AI Transportation and Logistics (T&L) series, I featured AI transformation innovations at Purolator; the second blog was about accelerating smarter AI telematics in fleet management. The third blog explored the emotion sensors of AI and the impact of the affective computing market on the transportation and logistics industry. The fourth blog covered AI revenue growth and operational optimization use cases to ensure your T&L business is positioned for accelerated growth. This fifth blog looks at the impact of robotic drones.
AI: Robotic Drones – Why is this important?
First, the drone logistics and transportation market is estimated by Precedence Research to exceed US $ 41.4 billion by 2030 and grow at a CAGR of 21.2% from 2021 to 2030. According to Precedence Research, the Drone logistics and transportation market size was valued at US $ 8.7 billion in 2020. Drones are defined as unmanned aerial vehicles that can be operated from a remote area. These unmanned aerial vehicles are used for various purposes such as delivery services, border surveillance, combat operations and many more. Delivery services provided by commercial drones are more cost effective and faster in nature. It has an accurate tracking program that enables precise location of the consumer, which helps deliver packages faster. With the advancement of technologies, innovative features can be added to drones that improve their efficiency. All of these attributes of drones are expected to drive the growth of drone logistics and transportation market.
Unmanned aerial vehicles are expected to generate $ 82 billion in economic growth by 2025 as well as 100,000 jobs. Despite recent regulations, the United States Federal Aviation Administration (FAA) has issued hundreds of waivers to companies interested in the commercial use of drones. While drones will impact a number of industries, they will have the greatest impact on the supply chain and logistics. Some of the decisions require special advice and awareness of some of the complexities of bringing drone construction to market.
For companies interested in the commercial use of drones as the delivery of drones, several rules conflict. Most notably, the “line of sight” rule which requires drone owners to keep their drones within sight at all times. For other limitations, companies can request waivers to circumvent the regulations, including:
Pilot a drone from an aircraft or a moving vehicle in a populated area,
Fly at night,
Pilot several drones with a single remote pilot,
Fly over people,
Fly more than 400 feet above ground level,
Fly over 100 miles per hour at ground speed, and
· Fly with less than 3 statute miles of visibility.
The main factors driving the growth of drones and delivery services in the logistics industry are:
- Large-scale use of the drone in various industries such as: warehousing, manufacturing, distribution facilities and many more.
- rapid innovation in drone technology, making them functional and energy efficient.
- the use of drones by the defense organization for combat operations around the world.
- the use of drones in mining operations, surveying operations, inspections of farmland and crops, and
- the use of drones in consumer grocery stores or parcel delivery.
According to Deutsche Bank, using drones and robots for delivery automation could lead to significant cost savings, with 80% of those savings showing up in the last mile. Consider the cost of a last mile shoebox delivery: Shoebox delivery with a premium carrier like FedEx UPS can cost $ 6 to $ 6.50 while USPS can cost $ 2. A drone delivery would cost less than $ 0.05 per mile. Drone deliveries would introduce very fast and cost effective shipping, two disruptive value propositions for transforming last mile delivery business models.
In 2013, Jeff Bezos unveiled Amazon’s drone delivery ambitions on “60 Minutes”. It is clear that Bezos’ vision is still ahead of the market. Amazon announced that Prime Air in 2016 will deliver products to customers in less than thirty minutes and be operational by 2020/2021 and that drones will take customer service to the next level. The promise was that drones would use much less manpower, reducing costs in the long run. This reality suffered a major setback, however, as hundreds of Prime Air employees in the UK lost their jobs and management consolidated and refined their drone launch strategy. I have no doubt that Amazon will be successful, as failure is a key foundation for learning innovation to build focus and resilience, and Amazon can afford a delay in drone delivery. Not everyone has this innovation market to rethink luxury. They will relaunch and I expect to see major developments in their leading offerings in the drone market by 2025, if not sooner.
The areas that have seen great success with drone deliveries are the modernization of warehouse operations. Warehouses are well aware of the time constraints of the supply chain and the importance of efficient processes such as picking, packaging and shipping. Every second counts. The longer it takes to process an inbound shipment, the longer it takes for products to enter inventory and the fewer items there are available for purchase and pickup and more importantly, the revenue does not. are not optimized.
Delivery by drone has a greater impact than the transport of goods. This has an impact on the way warehouses and distribution centers are designed and laid out.
The obvious change will be the size of the docks. Warehouse managers will no longer need extremely large docks to accommodate fleets of trucks. Drones completely transform the concept of warehouses and distribution centers and create “dark” distribution centers, with limited human involvement.
How? ‘Or’ What? Amazon already has a patent for an airborne distribution center using unmanned aerial vehicles for the delivery of items, also known as a “floating warehouse”. In short, a helium-filled airship would drift above air traffic, storing inventory in the air and dropping light packages using drones. While it might take a long time, it demonstrates how drone technology could reinvent the entire warehouse industry.
A little history is always helpful. Drones have been around for more than two decades, their roots going back to World War I, when France and the United States developed automatic unmanned airplanes. In recent years, drones have demonstrated many multiple functions. Indian drone start-ups have been able to detect mosquito breeding areas to help eradicate blood-borne diseases, and even deliver fast food to local communities in a safe and reliable manner.
Companies like Amazon have already reduced “click to ship” time from 60 to 75 minutes with a human to 15 minutes with warehouse drones; Additionally, Amazon warehouses equipped with drones carry 50% more inventory per square foot and have 20% lower operating costs, saving $ 22 million per warehouse for 13 warehouses.
If you are the CEO or director of a transport and logistics company, where do drones fit into your innovation strategy?
AAre you ready for this fully connected end-to-end business reality?