For several years now, drones have been presented as the future of the last mile delivery. Personally, I do not think that, at least in the near future, we will see in cities drones buzzing all around us. Indeed, people would be bothered by the noise and the vision of flying packages. Moreover, what would be the economic gain of such operations? In dense urban areas ground operations are already quite efficient and can be improved with less invasive technologies such as autonomous vehicles, robots, parcel boxes, etc. In rural areas, the limited range of a drone (of such size), dramatically reduces the opportunities to improve the service to the customers (and consumers). Especially when the cost factor is considered.
I do not doubt that some good business cases can be found regarding ecommerce deliveries but my guess is that it will be limited. Small drones will mainly be used for very specific operations linked to critical shipments and, as a consequence, will remain marginal. My point is not to say that drones are not an asset to logistics. That is the opposite, those vehicles should be considered in a different perspective.
When drones are more than sophisticated toy
There are tremendous opportunities for drones that could carry from hundreds of kilos to several tons of goods. For now, such vehicles are rather considered for passengers’ transportation but it seems that some companies are willing to explore the potential benefits for logistics. In my opinion such machines can solve major issues faced by carriers such as efficiency (and then costs to serve), lack of flexibility (impossible to offer tailored services) and sustainability.
For a clearer explanation let’s first quickly describe a (very) simplified example of a supply chain at work for an ecommerce purchase. The graph below describes the main steps followed by a good purchased online and distributed from a local warehouse (we talk about domestic volume).
The item is first collected by the logistics company and transported to a Local Distribution Center (A), where the various goods collected during the day (from different retailers) are consolidated and sent to the National Hub (B) once there they are sorted and consolidated by cities and zip codes. Those grouped goods are sent to Local Distribution Centers (C) and then sorted again to be delivered to consumers with smaller vehicles. This final leg (D) is the well-known “last mile delivery”. This organization based on the consolidation of volumes in hubs (whether National, Regional or International) is called the “hub and spoke” system.
Graph. 1. E-commerce simplified supply chain
Drones to improve efficiency in non-dense areas
Currently, at least in Europe, delivery operations are quite efficient in big cities (fully-loaded vehicles) numerous stops per hour, etc.). In the surrounding less dense areas the situation is more complex: vehicles leave Local Distribution Centers (LDC) without being fully-loaded, drive dozens of kilometers (often 100+) to reach the delivery area (leg D, see graph) and then connect the few stops planned. I strongly believe that there is an opportunity to improve such operations while being more sustainable (efficiency + vehicles using batteries) with a drone able to carry hundred kilos of cargo (100 – 200 kg). Such drone could, for example, drop off all the packages (collected in the LDC) at a local access point (and consumers would then come pick-up themselves the items) or at the facility of another last mile operator which would be able to add up this volume to its own, thus creating more density (and potentially to the volume provided by other carriers in the same way). Consolidating volumes provided by various carriers using drones would enable to create a certain density where it is not possible with numerous competing actors. This type of solutions could dramatically improve operations efficiency and this in different perspectives: companies would save time (flying is much quicker than driving), fuel (less KMs and it is electric) and all the costs related to the vehicles (X vehicles for the various communities to serve) and labor (X drivers for X rounds). There is also a cumulative positive effect in enabling the same drone to perform X legs that used to be performed by as many vehicles.
Drones are the new trucks
We can also go further and reconsider the traditional “hub and spoke” model (described on the graph i.e. packages should always go through the national hub to save money in creating economies of scales). Indeed, for the nearest cities (150, 200 KMs) it could make sense to connect directly two LDC: the one that sorts the collected goods with the one that sorts those to be delivered. Indeed, transporting few packages (this number can vary according the value of the service offered and the places considered) between those cities would not make sense with a vehicle (time on road, cost of fuel, driver wage, etc.), but it could with a drone of which marginal cost to operate is low (because it makes several connections the same day/night). If we consider drones able to carry several hundreds to several thousands of kilos of goods, they can for sure also be considered for the B and C segments but also to connect two LDC in different countries as long as they can perform multiple legs (when a truck would cover two at most -back and forth-).
Drones will disrupt the “hub and spoke” system
In a more general perspective, if drones can perform thousands of kilometers, being very efficient, it is the full “hub and spoke” system that can be reconsidered. At least at regional levels (for example the Europe region). Indeed, why consolidating packages in a European hub based in Paris to send a package from Brussels to Cologne if a drone can move thousands of kilos of goods quicker and at a lower cost than any truck would (but also any “conventional” flight) while reducing drastically the time in transit (a key element in the express delivery industry).
I have no doubts that most carriers are already considering drones as the future of the transport industry. That future is not far. Drones prices will decline when they will be produced at a sufficient scale and they will replace trucks (and “conventional” flights) that cause traffic, noise and pollution. It will also enable to solve an issue that is raising in all developed countries: the continuous increase of ecommerce volumes leads to tensions on the labor market. There is already a lack of people to drive trucks and light vehicles (needed for the last mile) and it will get worst.
 Several project are ongoing see for example the drones designed for couriers in China: http://www.chinadaily.com.cn/a/201805/31/WS5b0f32f0a31001b82571d482.html