The Domino Effect - Low-Value Drone Delivery

The logistics and delivery behemoth DHL has this week become the latest in a long line of multinationals to bow out of the drone delivery race. Our social feeds have been inundated for a decade with news of progress and industry firsts so you could be forgiven in wondering what has gone wrong? Well, like much in today's modern world, what's presented to us often does not reflect reality. Let's explore this further.

We have clear unresolved challenges in our industry, namely regulation maturity, achieving societal acceptance, and evolutionary technology developments. However, with our industry well versed and actively contributing to all the above you may be asking yourself, ‘am I missing something?’. Some may say that despite the hundreds of millions of dollars spent to date, some of that should have committed to building a business case. The elephant in the room is one of commercial viability. The economics of a drone delivery program where it is low-value goods being packed into boxes simply do not add up. Having heard the stories of delivery drivers receiving mere cents per parcel with the majority of these unsung heroes earning minimum wage, it doesn’t take a lot to work out this will likely be the most cost-effective method for some time.

With the overwhelming majority of purchasing decisions based on the price, it is unlikely we will see a willingness to spend thirty dollars for delivery vs five only to have a ten-dollar pack of batteries delivered via drone. Sure, you might get the occasional individual who favours the environmental benefits of drone vs van, but not at a scale that it becomes a sustainable business model. This quite promptly brings us back to the real value drones bring to the delivery supply chain. Namely, in things on which you cannot put a price; think organs, blood, and other life-saving necessities. In addition to this the delivery of high-value items across industry in which any delay can result in significant financial ramifications; think an emergency repair on a railway track requiring a specialised tool not located on-site. There are of course many more, commercially sustainable examples.

There is another possibility, perhaps one for those of us predisposed to cynicism. With some of the best minds in the industry working with these organisations it is hard to imagine they were not aware of what would be the likely outcome. If this was the case then perhaps the marketing material gleaned over the years has proved value enough in raising brand awareness. After all, we all remember that Amazon Prime advert with Clarkson, don’t we?