This commentary was written by Jack Underwood, co-founder and CEO of Circuit. The views expressed here are solely those of the author and do not necessarily represent the views of Modern Shipper or its affiliates.
The explosion of online shopping and our growing global economy makes shipping and delivery more important than ever. Faster is better, but what does the future of delivery really look like? Most people would answer “drones” and other methods of rapid, within-the-hour doorstep drop-offs.
Is that really the answer? Can that type of quick distribution be sustained? There may be a place for them in some heavily populated areas. But traditional last-mile delivery will remain the cornerstone of an effective shipping system.
Drones are likely here to stay, but they won’t completely replace traditional last-mile delivery. Here’s why.
Drones are taking off
Domino’s started with drone pizza delivery as early as 2016. Whilst Amazon Prime launched Prime Air in 2019 – using drones to deliver small packages to nearby households in under an hour.
More recently, Walmart has announced it is expanding drone delivery to four million U.S. households. And the Federal Aviation Administration approved UPS Flight Forward to become the first-ever drone service operating as a commercial airline.
That certainly sounds like a trend in last-mile fulfillment that is taking off (pun intended). But drones can’t do it all.
Where drones work…and where they don’t
There are situations where the use of unmanned drones is an effective means of delivery. They’re ideal for small packages, for instance. Drone delivery can also:
- Cut delivery times by avoiding traffic jams.
- Create fewer emissions since they are battery-powered.
- Reduce labor costs.
- Reduce the pressure on busy delivery drivers.
But there are limitations to drone delivery. Amazon’s drones, for instance, can only carry packages up to five pounds. Walmart states they can deliver packages up to 10 pounds. But there are security risks associated with unmanned delivery that a human courier might prevent. Drones are also vulnerable to the weather.
If drones become popular enough that there are hundreds of them in the skies at once, there’s the risk of serious noise pollution and potentially a backlash from the humans on the ground. Plus, people may raise privacy concerns if drones are using cameras and GPS systems to find their homes. Some state legislatures have already enacted drone-specific privacy laws.
There’s more.
Since drones can fly at low altitudes, some property owners and property rights advocates have opened debates about whether these aircraft can “trespass” on the land below. And there’s the possibility of negligence litigation if drones crash and cause injury. The U.S. Institute for Legal Reform concludes, “there are a wide range of issues surrounding the use of drones as well as many organizations trying to shape the laws that apply to drones.”
Increased regulation is a risk whenever there is a public backlash, possibly making it difficult for the technology to scale up.
Rapid delivery: a limited range
Another last-mile solution is rapid delivery, promising to get your goods to your door in around 15 minutes. This first emerged as an industry in Asia, then quickly expanded to Europe and major cities in the United States like New York, Chicago and San Francisco.
Players like Instacart and Doordash have been around for a while, but buzzy startups promising delivery in as little as 10 minutes gained traction during the pandemic. The quick-commerce (q-commerce) industry has since seen an outpouring of venture capital over the past couple of years, an indicator of high interest. But this method of delivery hasn’t expanded beyond those large city centers. There are a few reasons for that.
First, the promise of such short delivery times requires multiple warehouses, often called “dark stores,” and a concentrated customer base. Secondly, the customers themselves make this a niche service. They must be willing and able to pay for extra delivery costs and live within a radius that allows for such a short delivery time.
Now investor funding has slowed and some of those startups have had to resort to mass layoffs and closed warehouses of ultra-fast delivery companies like Gorillas. Regardless, these companies will have to find ways to grow beyond the need for venture capital and become profitable on their own, which will be tested by the customers’ continued willingness to pay.
That doesn’t mean drones and rapid delivery don’t have a place in the shipping chain. But delivery in minutes isn’t going to supersede the more widely accessible and achievable same-day delivery and the reality of other, sometimes longer delivery times.
The real future of last-mile delivery
The need for efficient and effective delivery systems isn’t going away. In fact, consumers are demanding quicker delivery times and some are willing to pay more to get their packages faster.
Same-day delivery is growing in popularity, and even among those willing to wait a bit longer, 65% now expect delivery in two to three days. That means, although drones and rapid delivery will have their place, courier and delivery companies, and retailers should invest in methods to optimize their last-mile delivery systems.
Here are some ways to do that.
1. Improve efficiency:
Companies can invest in new technologies or optimize existing ones to improve processes while mitigating costs. That could mean using route optimization software to help manage multiple drivers, as well as give them the most efficient routes for all their deliveries. This helps reduce travel time and fuel costs while keeping customers happy.
It could also mean achieving fast, same-day delivery. For example, dispatchers could use route data to pinpoint where a delivery driver is located, and then assign them a specific package in the direction they are going, boosting delivery efficiency and speed.
2. Collaborate with others:
Retailers or other major carriers could outsource some delivery needs to rapid delivery companies and individual gig drivers. That would help expand same-day delivery services, by stacking rapid delivery on top of same-day delivery. It could also expand capacity in busy times like the holiday season.
For larger cross-country operations, just some portions of delivery could be outsourced too, like the valuable last-mile delivery service.
3. Explore hybrid delivery forms:
While drones get all the attention, there are other possibilities to fix last-mile delivery. “Micro mobility” options like e-bikes and cargo bikes are small, environmentally friendly and space-efficient. These types of delivery vehicles may give a competitive advantage over cars, vans and trucks in busy and dense city centers. They are limited to the size of packages they can transport, but they may be a good addition to a fleet that already includes trucks and vans.
There’s also the possibility of using autonomous electric vehicles as mobile package lockers, allowing customers to collect parcels when the vehicle is in their area.
Conclusion
Our demand for online shopping and speedy delivery isn’t going away. In fact, customer expectations are likely to increase, meaning companies need to figure out last-mile delivery in order to stay competitive.
While drones and rapid delivery have a place in the future of last-mile delivery, there remain challenges with these new models. They won’t fit the needs of every type of delivery, meaning there’s still much to gain from optimizing the existing same-day and next-day delivery design.
About the author
Jack Underwood is the co-founder and CEO of Circuit, a software company dedicated to the last mile.